-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TuKGaG2FYH13Dt0ro6ESk5KgaIrtAGwKD2cPXi8DZyVjgQ0UtRsimDvDW33aKAZI I3+7BjjZIboUKefbx1A0wg== 0000912057-01-517707.txt : 20010528 0000912057-01-517707.hdr.sgml : 20010528 ACCESSION NUMBER: 0000912057-01-517707 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 33 FILED AS OF DATE: 20010525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MARITIME SHIP HOLDINGS LTD CENTRAL INDEX KEY: 0001127269 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-49814 FILM NUMBER: 1648994 BUSINESS ADDRESS: STREET 1: 35 WEST 56TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127635600 MAIL ADDRESS: STREET 1: 35 WEST 56TH AVENUE CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL MARITIME CORP DATE OF NAME CHANGE: 20001026 S-1/A 1 a2035178zs-1a.txt S-1/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 25, 2001 REGISTRATION NO. 333-49814 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ GENERAL MARITIME SHIP HOLDINGS LTD. (Exact name of registrant as specified in its charter) REPUBLIC OF THE MARSHALL ISLANDS 4412 06-1597083 (State or other jurisdiction of (Primary Standard Industrial (IRS Employer incorporation or organization) Classification Code Number) Identification Number)
35 WEST 56TH STREET NEW YORK, NY 10019 (212) 763-5600 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) PETER C. GEORGIOPOULOS CHAIRMAN AND CHIEF EXECUTIVE OFFICER 35 WEST 56TH STREET NEW YORK, NY 10019 (212) 763-5600 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ Copies of all communications to: THOMAS E. MOLNER, ESQ. MELVIN EPSTEIN, ESQ. Kramer Levin Naftalis & Frankel LLP Stroock & Stroock & Lavan LLP 919 Third Avenue 180 Maiden Lane New York, NY 10022 New York, NY 10038 (212) 715-9100 (212) 806-5864
------------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the Registration Statement becomes effective. ------------------------------ If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / / If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------------ CALCULATION OF REGISTRATION FEE
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE OFFERING OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE (1) REGISTRATION FEE common stock, $0.01 par value per share..................... 8,050,000 $19.00 $152,950,000 $39,847.50
(1) Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457 under the Securities Act of 1933. ------------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Subject to Completion, dated , 2001 PROSPECTUS 7,000,000 SHARES [GENERAL MARITIME LOGO] GENERAL MARITIME CORPORATION COMMON STOCK ---------------------------------------------------------------------- This is our initial public offering of shares of our common stock. We are offering 7,000,000 shares of our common stock. No public market currently exists for our common stock. We currently anticipate the initial public offering price to be between $17.00 and $19.00 per share. We intend to apply to have our common stock approved for quotation on the New York Stock Exchange under the symbol "GMR." ------------------------ INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 8. ---------------------
PER SHARE TOTAL --------- ------------ Public Offering Price....................................... $ $ Underwriting Discounts and Commissions...................... $ $ Proceeds to General Maritime................................ $ $
Our selling shareholders have granted the underwriters a 30-day option to purchase up to 1,050,000 additional shares of common stock from them to cover over-allotments, if any. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Lehman Brothers, on behalf of the underwriters, expects to deliver the shares on or about June , 2001. - -------------------------------------------------------------------------------- LEHMAN BROTHERS ABN AMRO ROTHSCHILD LLC JEFFERIES & COMPANY, INC. , 2001 TABLE OF CONTENTS
PAGE -------- PROSPECTUS SUMMARY.......................................... 1 RISK FACTORS................................................ 8 IMPORTANT ASSUMPTIONS IN THIS PROSPECTUS.................... 20 USE OF PROCEEDS............................................. 21 DIVIDEND POLICY............................................. 22 CAPITALIZATION.............................................. 22 DILUTION.................................................... 23 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA.............. 24 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................. 26 THE INDUSTRY................................................ 43 BUSINESS.................................................... 52 MANAGEMENT.................................................. 64 RECAPITALIZATION AND ACQUISITIONS........................... 71 PRINCIPAL AND SELLING SHAREHOLDERS.......................... 76 DESCRIPTION OF INDEBTEDNESS................................. 80 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 83 SHARES ELIGIBLE FOR FUTURE SALE............................. 84 DESCRIPTION OF CAPITAL STOCK................................ 85 TAX CONSIDERATIONS.......................................... 88 UNDERWRITING................................................ 97 LEGAL MATTERS............................................... 101 EXPERTS..................................................... 101 WHERE YOU CAN FIND ADDITIONAL INFORMATION................... 102 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................. F-1
------------------------ You should rely on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. The information in this document may only be accurate on the date of this document. This document may be used only where it is legal to sell these securities. Until , 2001, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments and subscriptions. PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. WE HAVE INCLUDED THIS INFORMATION IN THE PROSPECTUS SUMMARY BECAUSE WE BELIEVE THIS INFORMATION IS HIGHLY IMPORTANT IN MAKING A DECISION TO INVEST IN OUR COMMON STOCK. HOWEVER, BEFORE INVESTING IN OUR COMMON STOCK YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE SECTION ENTITLED "RISK FACTORS" AND OUR FINANCIAL STATEMENTS AND RELATED NOTES, FOR A MORE COMPLETE UNDERSTANDING OF OUR BUSINESS AND THIS OFFERING. OVERVIEW We are a leading provider of international seaborne crude oil transportation services within the Atlantic basin. In connection with this offering, our newly formed company is creating a 29-vessel fleet by bringing together the following 24 Aframax and five Suezmax tankers: - Fourteen (14) vessels which were owned and commercially managed by our predecessor entities and which we are assembling at the time of this offering that together constitute our existing fleet as described in our historical financial statements; - Five (5) vessels owned by affiliates of Wexford Capital LLC and commercially managed by our predecessor entities that we have agreements to acquire at the closing of this offering; and - Ten (10) vessels that we have agreements to acquire subsequent to this offering. Our existing fleet of 14 vessels generated approximately $48.0 million in voyage revenues, $32.8 million in EBITDA and $21.8 million in net income during the three months ended March 31, 2001 compared to approximately $22.8 million in voyage revenues, $11.8 million in EBITDA and $2.0 million in net income for the three months ended March 31, 2000. Our existing fleet of 14 vessels generated approximately $132.0 million in voyage revenues, $74.1 million in EBITDA and $30.3 million in net income for the year ended December 31, 2000. Upon completion of the transactions outlined above and described in more detail below, we will have, based on current world fleet statistics, the fourth largest mid-sized tanker fleet in the world based on our total cargo carrying capacity of approximately 3.0 million deadweight tons. With 17 of these 29 vessels currently operating in the Atlantic basin, we will have one of the largest fleets in this region, which includes ports in the Caribbean, South and Central America, the United States, Western Africa and the North Sea. We intend to deploy the remaining vessels in regions that we believe will maximize our financial performance. We estimate that during 2000, our existing fleet of 14 vessels transported more than 200 million barrels of crude oil into the United States, accounting for more than 6.2% of all U.S. crude oil imports. Our customers include most of the major international oil companies such as Chevron Corporation, CITGO Petroleum Corp., Exxon Mobil Corporation, Phillips Petroleum Company and Texaco Inc., which accounted for approximately 3.4%, 9.6%, 2.3%, 3.3% and 5.1%, respectively, of our voyage revenues in 2000. Approximately 23.7% of all our crude oil charters in 2000 were for these customers, with the balance spread among other oil companies, oil traders and tanker owners. We actively manage the deployment of our fleet between spot charters, which generally last from several days to several weeks, and time charters, which can last up to several years. A spot charter is generally a contract to carry a specific cargo from a load port to a discharge port for a fixed dollar amount. A time charter is generally a contract to charter a vessel for a fixed period of time at a set daily rate. Approximately 65.4% of our net voyage revenues were generated through spot charters for the three months ended March 31, 2001 compared to approximately 50.4% for the three months ended March 31, 2000. Approximately 63.2% of our net voyage revenues were generated through spot charters in 2000, compared to approximately 39.6% in 1999. Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of commissions and port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter. Our predecessor entities began operations in 1997 and their fleet had grown to 14 vessels as of March 31, 2001. The financial statements as well as the historical financial and statistical information reflect only these 14 vessels and their operating results, unless otherwise indicated. 1 OUR FLEET As of March 31, 2001, based on deadweight tons, the average age of our nine Aframax tankers operating in the Atlantic basin was approximately 10.3 years, compared to an average age for the world Aframax fleet of approximately 11.7 years. On the same basis, the average age of our five Suezmax tankers, all of which currently operate in the Atlantic basin, was 10.5 years, compared to an average age for the world Suezmax tanker fleet of approximately 11.8 years. We believe the relatively young age and quality of our fleet, coupled with our excellent safety record, position us favorably within the sector. The following chart provides information regarding all of our vessels, including the five vessels which we have agreements to acquire at the closing of this offering and the 10 vessels which we have agreements to acquire following the closing of this offering.
YEAR YEAR DEADWEIGHT EMPLOYMENT STATUS BUILT ACQUIRED TYPE TONS (EXPIRATION DATE) -------- ------------- -------- ----------- --------------------- OUR EXISTING FLEET (1) AFRAMAX TANKERS GENMAR AJAX.................................... 1996 1998 DH 96,183 TC (August 2003) GENMAR AGAMEMNON............................... 1995 1998 DH 96,226 Spot GENMAR MINOTAUR................................ 1995 1998 DH 96,226 Spot GENMAR CONSTANTINE............................. 1992 1998 DH 102,335 Spot GENMAR GABRIEL................................. 1990 1999 DS 94,993 Spot GENMAR GEORGE.................................. 1989 1997 DS 94,955 TC (May 2003) GENMAR COMMANDER............................... 1989 1997 SH 96,578 TC (February 2002) GENMAR BOSS.................................... 1985 1997 DS 89,601 Spot GENMAR SUN..................................... 1985 1997 DS 89,696 TC (February 2002) SUEZMAX TANKERS GENMAR SPARTIATE............................... 1991 2000 SH 155,150 Spot GENMAR ZOE..................................... 1991 2000 SH 152,402 Spot GENMAR MACEDON................................. 1990 2000 SH 155,527 Spot GENMAR ALTA (6)................................ 1990 1997 SH 146,251 Spot GENMAR HARRIET (6)............................. 1989 1997 SH 146,184 Spot --------- TOTAL 1,612,307 WEXFORD TANKERS (2) to be acquired at the closing of this offering AFRAMAX TANKERS GENMAR ALEXANDRA............................... 1992 DH 102,262 Spot GENMAR HECTOR.................................. 1992 DH(4) 96,027 Spot GENMAR PERICLES................................ 1992 DH(4) 96,027 Spot WEST VIRGINIA (5).............................. 1981 SH 89,000 Spot KENTUCKY (5)................................... 1980 SH 89,225 Spot --------- TOTAL 472,541 UNAFFILIATED TANKERS (3) to be acquired after the closing of this offering AFRAMAX TANKERS GENMAR CHAMPION (5)(6)......................... 1992 DH(4) 96,027 (7) GENMAR SPIRIT (5)(6)........................... 1992 DH(4) 96,027 (7) GENMAR STAR (5)(6)............................. 1992 DH(4) 96,027 (7) GENMAR TRUST (5)(6)............................ 1992 DH(4) 96,027 (7) GENMAR CHALLENGER (5)(6)....................... 1991 DH(4) 96,043 (7) GENMAR ENDURANCE (5)(6)........................ 1991 DH(4) 96,043 (7) GENMAR TRADER (5)(6)........................... 1991 DH(4) 96,043 (7) GENMAR LEONIDAS (5)(6)......................... 1991 DS 97,002 (7) GENMAR NESTOR (5)(6)........................... 1990 DS 97,112 (7) GENMAR PRINCE (5)(6)(8)........................ 1979 SH 88,868 TC (January 2002)(9) --------- TOTAL 955,219 ========= TOTAL FLEET 3,040,067
DH Double-hull tanker; DS Double-sided tanker; SH Single-hull tanker; TC Time Charter 2 (1) Vessels owned by our predecessor entities prior to this offering, which we currently commercially manage and which are reflected in the financial statements and historical financial and statistical information contained in this prospectus, unless otherwise indicated. (2) Vessels owned by affiliates of Wexford Capital, LLC prior to the closing of this offering, which we currently commercially manage. (3) Our acquisition of these vessels is subject to the terms and conditions of the related acquisition agreements. See discussion under the heading "Recapitalization and Acquisitions." (4) Oil/Bulk/Ore carrier (O/B/O). (5) These vessels currently operate outside of the Atlantic basin. Accordingly, we have not included them in our calculation of the Atlantic basin statistics. (6) The GENMAR ALTA, GENMAR HARRIET, GENMAR CHAMPION, GENMAR SPIRIT, GENMAR STAR, GENMAR TRUST, GENMAR CHALLENGER, GENMAR ENDURANCE, GENMAR TRADER, GENMAR LEONIDAS, GENMAR NESTOR and GENMAR PRINCE are currently named the ALTA, HARRIET, SCF CHAMPION, SCF SPIRIT, SCF STAR, SCF TRUST, SCF CHALLENGER, SCF ENDURANCE, SCF TRADER, ANJA, ANELLA and STAVANGER PRINCE, respectively. We intend to formally change the names of these vessels following our acquisition of them. (7) We expect to acquire these vessels free from charters and, upon our acquisition of them, will deploy them on charters that we deem appropriate. (8) Peter C. Georgiopoulos has an interest in this vessel. See discussion under the heading "Recapitalization and Acquisitions--Contribution of Vessels." (9) We have an agreement to assume the charter for this vessel upon our acquisition of it. MARKET OPPORTUNITIES Over the past several years, we believe a variety of industry trends have converged to alter the dynamics of the market for tanker services. We believe the following factors in particular are creating a positive outlook for our business: - OIL IMPORTS ARE RISING. The United States is the leading importer of crude oil in the world. Since 1995, U.S. demand for crude oil has risen in the aggregate by 5.6%, whereas U.S. crude oil production has declined by approximately 12.1% during the same period. Driven by the imbalance of supply and demand, U.S. crude oil imports have increased by approximately 19.5% since 1995. - TANKER FLEET IS AGING. Approximately 28.7% of all tankers in the world over 10,000 deadweight tons (a standard unit of measurement of a vessel's cargo capacity) are currently 20 years of age or older and thus are approaching the end of their useful lives. In the combined Aframax and Suezmax tanker markets, where we operate, the total capacity of mid-sized tankers 20 years of age or older is approximately 12.5% greater than the total capacity of new mid-sized vessels currently on order. - FOCUS ON SAFETY IS GROWING. We believe that charterers, regulators and insurers have become increasingly focused on environmental safety. Strict regulation of the industry has resulted in the phasing out of older vessels and correspondingly stronger demand and higher rates for more modern tonnage operated by experienced companies. BUSINESS STRATEGY To maximize shareholder value and enhance our position as a leading provider of international seaborne crude oil transportation services within the Atlantic basin, we are pursuing the following business strategies: - GROWING OUR FLEET THROUGH ACQUISITIONS OF VESSELS AND BUSINESSES. We are an industry consolidator focused on acquiring high-quality, second-hand, mid-sized tankers. The mid-sized tanker market is highly fragmented with a total of approximately 183 tanker operators. Of those, approximately 63.4% own three vessels or less. We believe this provides us with a significant opportunity to expand our presence in the Atlantic basin and achieve economies of scale in this market. - CONDUCTING ENVIRONMENTALLY SAFE, COST-EFFICIENT OPERATIONS. We aggressively manage our operating and maintenance costs. At the same time, we believe our fleet has an excellent safety record which we intend to maintain through acquisitions of high-quality vessels and regular maintenance and inspection of our fleet. We believe that our operating history and excellent safety record will help us strengthen our relationships with existing customers and develop relationships with new ones. - MANAGING OUR FLEET DEPLOYMENT. We seek to balance the mix of our fleet deployment between spot charters and time charters. This fleet deployment strategy is designed to enable us to achieve a stable revenue stream throughout the cycles of the market while preserving our ability to benefit from potential increases in tanker rates. 3 COMPETITIVE STRENGTHS We believe we possess a number of competitive strengths that will allow us to enhance our position within the industry: - WE OPERATE A FLEET OF MID-SIZED TANKERS which we believe helps us manage and contain our costs. A number of our vessels have one or two substantially identical "sister ships" in our fleet, which provides us with vessel substitution opportunities that enhance our operational flexibility. - WE ARE BUILDING CUSTOMER RELATIONSHIPS with leading oil companies such as Chevron Corporation, CITGO Petroleum Corp., Exxon Mobil Corporation, Phillips Petroleum Company and Texaco Inc. These oil companies accounted for approximately 3.4%, 9.6%, 2.3%, 3.3% and 5.1%, respectively, of our voyage revenues in 2000. - WE HAVE AN EXPERIENCED MANAGEMENT TEAM in all of the commercial, technical and management areas of our business. Our senior executive officers and key employees have a combined total of more than 90 years in the shipping industry. While we strive to maintain these strengths, we operate in a highly competitive industry which is subject to downturns in regional and global economies as well as changes in regulations which could adversely affect us and our industry. For a discussion of these and other risks which could adversely affect us and our industry, you should read the section of this prospectus entitled "Risk Factors." COMPANY BACKGROUND We are a newly formed company that, at the time of this offering, will own 14 vessels through the assembly of our predecessor entities and the acquisition of another company. We also have agreements to acquire five additional vessels at the closing of this offering and 10 additional vessels following the closing of this offering. These transactions are described below. At the time of this offering, we are assembling our predecessor entities, as described below. - We are acquiring for shares of our common stock seven limited partnerships for which corporations owned by Peter C. Georgiopoulos acted as managing general partner and which own an aggregate of 14 vessels. - We are acquiring for shares of our common stock a corporation owned by Peter C. Georgiopoulos which provides commercial management services for the 14 vessels described above, which we refer to in this prospectus as the "old General Maritime Corporation." At the time of this offering, we are also acquiring for cash United Overseas Tankers Ltd., a corporation located in Piraeus, Greece, which conducts technical operations, such as staffing and maintenance, for many of our vessels. We have an agreement to acquire, at the closing of this offering, for shares of our common stock and repayment of indebtedness, five special purpose entities which are owned by affiliates of Wexford Capital, LLC and which own an aggregate of five vessels. Shortly after the closing of this offering, we anticipate closing the acquisition of 10 additional vessels, three of which we have agreements to acquire for shares of our common stock and the repayment of indebtedness secured by these vessels and the remaining seven of which we have agreements to acquire for cash. These closings will be subject to the terms and conditions of the related acquisition agreements. See the discussion under the heading "Recapitalization and Acquisitions." The 14 vessels previously owned by limited partnerships for which affiliates of Peter C. Georgiopoulos acted as managing general partner and the old General Maritime Corporation and their operating results are reflected in our financial statements and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations." The 4 remaining 15 vessels and United Overseas Tankers Ltd. and their operating results are not so reflected. You should read the discussions under the heading "Recapitalization and Acquisitions" and "Certain Relationships and Related Transactions" for more information regarding these acquisitions. At the closing of this offering, we intend to enter into a new loan facility that will be used to refinance the existing loan facilities associated with the 14 vessels owned prior to this offering by limited partnerships for which affiliates of Peter C. Georgiopoulos acted as managing general partner. We also intend to repay the indebtedness associated with the five other vessels that we have agreements to acquire at the closing of this offering and three of the vessels that we have agreements to acquire for shares of common stock following the closing of this offering, by drawing upon the new debt facility. We also intend to enter into an additional loan facility in connection with our acquisition of the seven additional vessels that we have agreed to acquire for cash after the closing of this offering. As of December 31, 2000, we were in default under some of our existing loan facility agreements, but we received written waivers of the defaults. In addition, some of the covenants of our existing loan facility agreements were amended to reduce working capital and other requirements. General Maritime Corporation is incorporated under the laws of the Republic of the Marshall Islands. We maintain our principal executive offices at 35 West 56th Street, New York, NY 10019. Our telephone number at that address is (212) 763-5600. THE OFFERING Common stock offered by us................ 7,000,000 shares Common stock to be outstanding after this offering................................ 36,000,000 shares Use of proceeds........................... For (i) the reduction of outstanding borrowings, (ii) partial payment for seven of the 10 vessels that we have agreements to acquire for cash after the closing of this offering and (iii) our acquisition of United Overseas Tankers Ltd. in connection with our recapitalization. We will not receive any proceeds from the sale of 1,050,000 shares that may be purchased by the underwriters from the selling shareholders to cover over-allotments, if any. You should read the discussion under the heading "Use of Proceeds" for more information. Proposed New York Stock Exchange symbol... GMR
The number of shares of our common stock to be outstanding upon completion of this offering is based on the number of shares to be outstanding upon completion of our recapitalization. The number of shares to be outstanding upon completion of this offering does not include 2,900,000 shares that we may issue under our stock incentive plan, including 760,000 shares subject to options we have issued thereunder. You should read the discussion under the heading "Capitalization" for more information regarding the outstanding shares of our common stock, warrants and options to purchase our common stock and the discussion under the heading "Underwriting" for more information regarding the underwriters' over-allotment option. 5 SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA The following summary consolidated financial and other data should be read in connection with, and are qualified by reference to, the financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 1999 and 1998 and for the period from February 1, 1997 to December 31, 1997 and the consolidated balance sheet data as of December 31, 1999 and 1998 are derived from our consolidated financial statements, which have been audited by Ernst & Young LLP, independent auditors. The consolidated statements of operations data for the year ended December 31, 2000 and the consolidated balance sheet data as of December 31, 2000 are derived from financial statements, which have been audited by Deloitte & Touche LLP. The summary consolidated financial data as of and for the three months ended March 31, 2001 and 2000 have been derived from our unaudited financial statements and, in the opinion of our management, include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of such information. Operating results for the three months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the entire year. The fleet data for each of the periods described above are derived from our operational data. Historical results are not necessarily indicative of results that may be expected for any future period.
ELEVEN THREE MONTHS ENDED YEAR ENDED MONTHS MARCH 31, DECEMBER 31, ENDED ------------------------- --------------------------------------- DECEMBER 31, 2001 2000 2000 1999 1998 1997 (1) ----------- ----------- ----------- ------------ ---------- ------------ INCOME STATEMENT DATA (dollars in thousands) Voyage revenues........................... $ 48,042 $ 22,766 $ 132,012 $ 71,476 $ 62,031 $ 12,436 Operating expenses Voyage expenses......................... 7,004 4,783 23,996 16,742 10,247 465 Direct vessel expenses.................. 6,809 5,126 23,857 19,269 15,684 3,010 General and administrative expenses..... 1,399 1,064 4,792 3,868 2,828 1,101 Depreciation and amortization........... 6,881 5,390 24,808 19,810 16,493 3,402 Other expenses.......................... -- -- 5,272 -- -- -- ----------- ----------- ----------- ------------ ---------- ----------- Total operating expenses.............. 22,093 16,363 82,725 59,689 45,252 7,978 Operating income...................... 25,949 6,403 49,287 11,787 16,779 4,458 Net interest expense.................. 4,192 4,391 19,005 16,525 14,654 3,016 ----------- ----------- ----------- ------------ ---------- ----------- Net income (loss)..................... $ 21,757 $ 2,012 $ 30,282 $ (4,738) $ 2,125 $ 1,442 =========== =========== =========== ============ ========== =========== BALANCE SHEET DATA at end of period (dollars in thousands) Cash...................................... $ 31,581 NA $ 23,523 $ 6,842 $ 6,411 $ 3,291 Total assets.............................. 441,624 NA 438,922 351,146 345,633 194,340 Long-term debt Long-term debt (2)...................... 222,699 NA 241,785 202,000 241,625 135,550 Weighted average long-term debt for period................................ 228,564 NA 233,010 219,008 203,398 46,679 Total shareholders' equity................ 207,522 NA 186,910 125,878 99,650 55,543 OTHER FINANCIAL DATA (dollars in thousands) EBITDA (3)................................ $ 32,830 $ 11,793 $ 74,095 $ 31,597 $ 33,272 $ 7,860 Net cash provided by operating activities.............................. 27,054 6,429 47,720 12,531 15,665 6,042 Net cash used in investing activities..... (15) (199) (85,865) (18,688) (159,206) (189,716) Net cash provided by financing activities.............................. (18,981) (4,564) 54,826 6,588 146,661 186,965 Capital expenditures Vessel purchases, gross................. -- -- (85,500) (18,200) (158,700) (189,716) Drydocking.............................. (167) (230) (3,168) (4,074) (250) --
6
ELEVEN THREE MONTHS ENDED YEAR ENDED MONTHS MARCH 31, DECEMBER 31, ENDED ------------------------- --------------------------------------- DECEMBER 31, 2001 2000 2000 1999 1998 1997 (1) ----------- ----------- ----------- ------------ ---------- ------------ FLEET DATA Total number of vessels at end of period.................................. 14 11 14 11 10 6 Weighted average number of vessels (4)(6).................................. 13.8 11.0 12.6 10.3 8.3 1.7 Total voyage days for fleet (5)(6)........ 1,245 1,001 4,474 3,603 3,030 620 Total calendar days for fleet (6)(7)...... 1,260 1,001 4,599 3,756 3,030 623 Fleet utilization (8)..................... 98.8% 100% 97.3% 95.9% 100% 99.5% AVERAGE DAILY RESULTS Time charter equivalent (9)............... $ 32,962 $ 17,965 $ 24,143 $ 15,191 $ 17,090 $ 19,308 Total vessel operating expenses (10)...... 6,514 6,184 6,223 6,103 6,109 6,599 EBITDA (3)................................ 26,056 11,781 16,111 8,412 10,981 12,616 PER SHARE DATA (11) (dollars in thousands, except share data) Net income/(loss)......................... 21,757 2,012 30,282 (4,738) 2,125 1,442 Basic................................... 1.01 0.13 1.60 (0.33) 0.21 0.41 Fully diluted........................... 1.01 0.13 1.60 (0.33) 0.21 0.41 Weighted average shares for basic and fully diluted......................... 21,503,906 15,805,393 18,946,950 14,337,246 10,289,533 3,536,727
- ------------------------------ NA Not Applicable. (1) Since our inception on February 1, 1997. (2) Long-term debt is inclusive of current portion of debt for the relevant period. In 1999, it excludes a $15 million note payable to one of our shareholders that was cancelled and contributed to our capital in June 2000. (3) EBITDA represents net income from continuing operations before net interest expense, income tax expense, depreciation and amortization expense. EBITDA is included because it is used by investors to measure a company's financial performance. EBITDA is not an item recognized by Generally Accepted Accounting Principles, or GAAP, and should not be considered as an alternative to net income or any other indicator of our performance required by GAAP. The definition of EBITDA used in this offering may not be comparable to that used by other companies. (4) Weighted average number of vessels is the average number of vessels that constituted our fleet for that year, as measured by the sum of the number of days each vessel was part of our fleet divided by the number of calendar days in that year. (5) Voyage days are the total days our vessels were in our possession, net of off-hire days associated with major repairs, drydockings or special surveys. (6) Reflects an extra day in 2000, which was a leap year. (7) Calendar days are the total days our vessels were in our possession, including off-hire days associated with major repairs, drydockings or special surveys. (8) Fleet utilization is the percentage of time that the vessels in our possession were available for revenue generating voyages and is determined by dividing voyage days by calendar days. (9) Time charter equivalent is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating time charter equivalent is consistent with industry standards and is determined by dividing net voyage revenues by voyage days for the time period. Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of commissions and port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter. (10) Total vessel operating expenses are our total expenses associated with operating our vessels. We determine total vessel operating expenses by dividing the sum of direct vessel expenses and general and administrative expenses, net of non-recurring organizational, legal and other one-time fees, by calendar days. (11) Basic earnings/(loss) per share are computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted income/(loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. There were no dilutive securities outstanding during the years presented. 7 RISK FACTORS INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE THOSE THAT WE CURRENTLY BELIEVE MAY MATERIALLY AFFECT OUR COMPANY. IF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE SERIOUSLY HARMED AND THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE. RISKS RELATED TO OUR INDUSTRY AN INCREASE IN THE SUPPLY OF TANKER CAPACITY WITHOUT AN INCREASE IN DEMAND FOR TANKER CAPACITY COULD CAUSE CHARTER RATES TO DECLINE, WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE. Historically, the tanker industry has been cyclical. The profitability and asset values of companies in the industry have fluctuated based on changes in the supply of and demand for tanker capacity. The supply of tankers generally increases with deliveries of new vessels and decreases with the scrapping of older vessels, conversion of vessels to other uses, such as floating production and storage facilities, and loss of tonnage as a result of casualties. If the number of new ships delivered exceeds the number of vessels being scrapped, tanker capacity will increase. If the supply of tanker capacity increases and the demand for tanker capacity does not, the charter rates paid for our vessels could materially decline. A material decline in our charter rates would decrease our profitability. A DECLINE IN DEMAND FOR CRUDE OIL OR A SHIFT IN OIL TRANSPORT PATTERNS COULD MATERIALLY AND ADVERSELY AFFECT OUR REVENUES. The demand for tanker capacity to transport crude oil depends upon world and regional oil markets. A number of factors influence these markets, including: - global and regional economic conditions; - increases and decreases in production of and demand for crude oil; - developments in international trade; and - changes in seaborne and other transportation patterns. Historically, these markets have been volatile as a result of the many conditions and events that can affect the price, demand, production and transport of oil, as well as competition from alternative energy sources. Falling tanker charter rates in our markets or fewer charters may have a material adverse effect on our revenues. CHARTER RATES MAY DECLINE, WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE. Rates that charterers pay for transportation of crude oil by Aframax and Suezmax tankers are higher than they have been for several years. Because many of the factors which influence the supply of and demand for vessel capacity are unpredictable, the nature, timing and degree of changes in charter rates are unpredictable. THE MARKET FOR CRUDE OIL TRANSPORTATION SERVICES IS HIGHLY COMPETITIVE AND WE MAY NOT BE ABLE TO EFFECTIVELY COMPETE. Our vessels are employed in a highly competitive market. Our competitors include the owners of other Aframax and Suezmax tankers and, to a lesser degree, owners of other size tankers. Both groups include independent oil tanker companies as well as oil companies. We do not control a sufficiently large share of the market to influence the market price charged for crude oil transportation services. Our market share may decrease in the future. We may not be able to compete profitably as we expand 8 our business into new geographic regions or provide new services. New markets may require different skills, knowledge or strategies than we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than we do. FLUCTUATIONS IN THE MARKET VALUE OF OUR FLEET MAY IMPAIR OUR ABILITY TO OBTAIN ADDITIONAL FUNDING. The market value of tankers fluctuates depending upon general economic and market conditions affecting the tanker industry, the number of vessels in the world fleet, the price of newbuildings, types and sizes of vessels and the cost of other modes of transportation. The market value of our fleet may decline as a result of a downswing in the historically cyclical shipping industry. Declining vessel values could affect our ability to raise cash and thereby adversely impact our liquidity. In addition, declining vessel values could result in a breach of loan covenants, which could give rise to events of default under our financing agreements. REGULATIONS AFFECTING THE TANKER INDUSTRY MAY LIMIT OUR ABILITY TO DO BUSINESS AND MAY INCREASE OUR COSTS. Our operations are affected by extensive and changing environmental protection laws and other regulations. Complying with these laws has been expensive historically and has periodically required ship modifications and changes in operating procedures across the industry. The U.S. Oil Pollution Act of 1990 provides for the phase-in of the exclusive use of double-hull tankers at U.S. ports. To comply with the act tanker owners must meet maintenance and inspection requirements, develop contingency arrangements for potential spills and maintain financial responsibility requirements for vessels operating in the United States' 200-mile exclusive economic zone. While we believe that we currently comply with all regulations, we cannot assure you that we will always be able to do so in the future. Under the U.S. Oil Pollution Act of 1990, owners, operators and bareboat charterers are strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. The act limits this strict liability to the greater of $1,200 per gross ton or $10 million. However, it also allows unlimited liability in some circumstances and specifically permits individual states to impose their own penalties for oil pollution within their boundaries. Most states bordering on a navigable waterway have enacted legislation providing for potentially unlimited liability for the discharge of pollutants within their waters. We believe that the Atlantic basin, including certain ports in the United States, is currently one of the most environmentally sensitive shipping markets in the world, and the companies which operate there must meet more stringent environmental regulations than companies operating elsewhere. If we fail to meet those requirements, our operations in the region could be restricted and our results could be materially and adversely affected. In 1992, the International Maritime Organization, or IMO, the United Nations' agency for maritime safety, followed the example set by the U.S. Oil Pollution Act of 1990 and adopted regulations for tanker design and inspection. The IMO's regulations aim to reduce the likelihood of oil pollution in international waters and are being phased in on a schedule based upon vessel age. In April 2001, the IMO set forth a proposal to revise these regulations which is expected to become effective September 2002. The revised regulations provide for a more aggressive phase-out of single-hull oil tankers as well as increased inspection and verification requirements. The revised regulations provide for the phase-out of most single-hull oil tankers by 2015 or earlier, depending on the age of the vessel and whether the vessel complies with requirements for protectively located segregated ballast tanks. Segregated ballast tanks use ballast water that is completely separate from the cargo oil and oil fuel system. Segregated ballast tanks are currently required by the IMO on crude oil tankers constructed after 1983. The changes, which will likely increase the number of tankers that are scrapped beginning in 2004, are intended to reduce the likelihood of oil pollution in international waters. 9 In addition, the European Union and countries elsewhere are considering stricter technical and operational requirements for tankers and legislation that would affect the liability of tanker owners and operators for oil pollution and limit their ability to use vessels other than double-hull vessels. Italy has already announced a ban of single-hull crude oil tankers over 5,000 dwt from most Italian ports. This ban will be extended to single-hull carriers of oil products on December 31, 2001. Additional laws and regulations may be adopted which could limit our ability to do business or increase our costs. The results of these or potential future environmental regulations could have a material adverse effect on our operations. SHIPPING IS AN INHERENTLY RISKY BUSINESS AND OUR INSURANCE MAY NOT BE ADEQUATE. Our vessels and their cargoes are at risk of being damaged or lost because of events such as marine disasters, bad weather, mechanical failures, human error, war, terrorism, piracy and other circumstances or events. In addition, transporting crude oil creates a risk of business interruptions due to political circumstances in foreign countries, hostilities, labor strikes and boycotts. Any of these events may result in loss of revenues and increased costs. We carry insurance to protect against most of the accident-related risks involved in the conduct of our business. We currently maintain $1 billion in coverage for each of our vessels for liability for spillage or leakage of oil or pollution. We also carry insurance covering lost revenue resulting from vessel off-hire for all but two of our time-chartered vessels. Nonetheless, risks may arise against which we are not adequately insured. For example, a catastrophic spill could exceed our insurance coverage and have a material adverse effect on our operations. In addition, we may not be able to procure adequate insurance coverage at commercially reasonable rates in the future and we can not guarantee that any particular claim will be paid. In the past, new and stricter environmental regulations have led to higher costs for insurance covering environmental damage or pollution, and new regulations could lead to similar increases or even make this type of insurance unavailable. Furthermore, even if insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement ship in the event of a loss. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive insurance coverage for tort liability. Our payment of these calls could result in significant expenses to us which could reduce our profits or cause losses. OUR OPERATING RESULTS MAY FLUCTUATE SEASONALLY. We operate our tankers in markets that have historically exhibited seasonal variations in tanker demand and, as a result, in charter rates. Tanker markets are typically stronger in the fall and winter months (the fourth and first quarters of the calendar year) in anticipation of increased oil consumption in the northern hemisphere during the winter months. Unpredictable weather patterns and variations in oil reserves disrupt vessel scheduling. While this seasonality has not materially affected our operating results since 1997, it could materially affect our operating results in the future. RISKS RELATED TO OUR COMPANY WE MAY NOT BE ABLE TO GROW OR TO EFFECTIVELY MANAGE OUR GROWTH. A principal focus of our strategy is to continue to grow by expanding our business in the Atlantic basin, the principal geographic area and market where we operate. Our future growth will depend upon a number of factors, some of which we can control and some of which we cannot. These factors include our ability to: - identify businesses engaged in managing, operating or owning vessels for acquisitions or joint ventures; - identify vessels for acquisitions; 10 - consummate acquisitions or joint ventures; - integrate any acquired businesses or vessels successfully with our existing operations; - hire, train and retain qualified personnel to manage and operate our growing business and fleet; - identify new markets outside of the Atlantic basin; - improve our operating and financial systems and controls; and - obtain required financing for our existing and new operations. OUR ACQUISITION OF 10 VESSELS FOLLOWING THE CLOSING OF THIS OFFERING IS SUBJECT TO TERMS AND CONDITIONS WHICH MAY NOT BE FULFILLED. We have agreements to acquire 10 vessels following the closing of this offering. Our agreements to acquire these vessels are subject to our completion of this offering not later than June 15, 2001. If we fail to complete this offering by that date, we may not be able to purchase them. Our acquisition of these vessels is subject to terms and conditions described under the captions "Recapitalization and Acquisitions--Description of Plan of Recapitalization--Contribution of Vessels" and "--Acquisitions--Acquisition of Vessels." These terms and conditions include, among other things, the completion of a satisfactory inspection of the vessels. If these terms and conditions are not fulfilled or waived as to one or more of these vessels, we will not acquire the vessels. We intend to use borrowings of approximately $215.6 million (consisting of $50.6 million from the revolving credit portion of our new $300.0 million loan facility and $165.0 million of borrowings pursuant to an additional loan facility agreement that we are currently negotiating), to acquire these vessels following the closing of this offering. We cannot assure you that we will obtain the additional loan facility that we are currently negotiating or that we will obtain the facility on terms and conditions that are favorable to us. If we cannot obtain these loans, we will not be able to acquire these vessels. IF WE FAIL TO TAKE DELIVERY OF SOME OR ALL OF THE 10 VESSELS THAT WE HAVE AGREEMENTS TO ACQUIRE FOLLOWING THE CLOSING OF THIS OFFERING, WE COULD LOSE SOME OR ALL OF OUR $27.2 MILLION DEPOSIT. Under our agreements to acquire 10 vessels following the closing of this offering, we will pay the sellers of these vessels deposits of approximately $27.2 million from the proceeds of this offering. If we fail to take delivery of one or more of these vessels, we could lose some or all of our deposits. OUR LOAN AGREEMENTS CONTAIN RESTRICTIVE COVENANTS WHICH MAY LIMIT OUR LIQUIDITY AND CORPORATE ACTIVITIES. Our vessels are subject to mortgages. These financing agreements impose operating and financial restrictions, including restrictions which limit our ability to: - incur additional indebtedness; - create liens on our assets; - sell the capital stock of our subsidiaries or other assets; - make investments; - engage in mergers and acquisitions; - make capital expenditures or pay dividends; - change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and - sell our vessels. 11 Accordingly, to engage in various corporate activities we will need the permission of our lenders, whose interests are different from and may be adverse to those of our shareholders. We cannot assure you that we will be able to obtain our lenders' permission if and when we need it. Our failure to obtain permission will keep us from effecting corporate transactions and may prevent us from expanding or properly managing our company. IF WE DEFAULT UNDER ANY OF OUR LOAN AGREEMENTS, WE COULD FORFEIT OUR RIGHTS IN OUR VESSELS AND THEIR CHARTERS. We have pledged all of our vessels and related collateral as security to the lenders under our loan agreements. Default under any of these loan agreements, if not waived or modified, would permit the lenders to foreclose on the mortgages over the vessels and the related collateral, and we could lose our rights in the vessels and their charters. As of December 31, 2000, we were in default under our loan facility agreements for breaching several covenants. The lenders waived their right to take action with respect to these defaults. The breaches which were waived are set forth below: - we did not meet all of our working capital and cash balance requirements; and - some of our limited partnerships made intercompany loans, all of which were subsequently repaid in full. When final payments are due under our loan agreements, we must repay any borrowings outstanding. To the extent that our cash flows are insufficient to repay any of these borrowings, we will need to refinance some or all of our loan agreements or replace them with an alternate credit arrangement. We may not be able to refinance or replace our loan agreements at the time they become due. In addition, the terms of any refinancing or alternate credit arrangement may restrict our financial and operating flexibility. IF WE LOSE ANY OF OUR CUSTOMERS OR A SIGNIFICANT PORTION OF OUR REVENUES, OUR OPERATING RESULTS COULD BE MATERIALLY ADVERSELY AFFECTED. We derive, and believe that we will continue to derive, a significant portion of our voyage revenues from a limited number of customers. During the three months ended March 31, 2001 Skaugen PetroTrans, Inc., Sun International Ltd. and Phillips Petroleum Company accounted for 14.8%, 13.2% and 12.9%, respectively, of our voyage revenues. During 2000, The Coastal Corporation, an international oil company acquired in January 2001 by El Paso Energy Corporation, and OMI Corporation, another tanker owner, accounted for 14.7% and 11.3%, respectively of our voyage revenues (revenues from OMI Corporation resulted primarily from the time charters of two of our vessels which we terminated, effective during the fourth quarter of 2000). If we lose a significant customer, or if a significant customer decreases the amount of business it transacts with us, our revenues could be materially adversely affected. WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE OR MANAGE OUR RECENTLY FORMED TECHNICAL MANAGEMENT SUBSIDIARY. We depend on United Overseas Tankers Ltd. to manage the technical operations, such as the staffing and maintenance of many of our vessels. In connection with our recapitalization, we acquired United Overseas Tankers Ltd., a Liberian corporation that was formed and commenced operations in 2000. Since its formation, United Overseas Tankers Ltd. has been engaged in the business of managing the technical operations of many of our vessels and has not provided this service to any other customers. United Overseas Tankers Ltd. may encounter risks, uncertainties, expenses and difficulties frequently encountered by companies with limited operating histories. Because we did not previously operate the business of United Overseas Tankers Ltd., we may have difficulty successfully integrating and managing its operations. 12 AS OUR FLEET AGES, THE RISKS ASSOCIATED WITH OLDER VESSELS COULD ADVERSELY AFFECT OUR OPERATIONS. In general, the costs to maintain a vessel in good operating condition increase as the vessel ages. As of March 31, 2001, the average age, based on deadweight tons, of our 29-vessel fleet, including the 14 vessels that we are acquiring at the time of this offering and the 15 vessels that we have agreements to acquire at or after the closing of this offering, was 10.9 years. Due to improvements in engine technology, older vessels are typically less fuel-efficient than more recently constructed vessels. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. For instance, under the International Maritime Organization's regulations, oil tankers over 25 years old must be double-hulled, have a mid-deck design or be hydrostatically balanced. We cannot assure you that, as our vessels age, market conditions will justify any required expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. In addition, new regulations proposed by the International Maritime Organization that are expected to take effect in 2002 will require us to phase-out our single-hull tankers by 2015 or earlier, depending on the age of the tanker. OUR INABILITY TO TRADE WITH OUR SINGLE-HULL VESSELS IN U.S. WATERS BEGINNING IN 2010 COULD ADVERSELY AFFECT OUR OPERATIONS AND MARKET POSITION. Under the U.S. Oil Pollution Act of 1990, all oil tankers that do not have double hulls will be phased out by 2015 and will not be permitted to come to U.S. ports or trade in U.S. waters. Our 29-vessel fleet, including the 14 vessels that we are acquiring at the time of this offering and the 15 vessels that we have agreements to acquire at or after the closing of this offering, consists of nine single-hull vessels, six double-sided vessels and 14 double-hull vessels. Three of our single-hull vessels and two of our double-hull vessels do not serve U.S. ports and are not subject to the U.S. Oil Pollution Act of 1990. The remaining six single-hull vessels and the four double-sided vessels may be redeployed to other markets, sold or scrapped when they can no longer serve U.S. ports under the act. The U.S. Coast Guard annually inspects vessels that trade in U.S. waters and determines which vessels will be phased out under the act. These dates are recorded in tank vessel examination letters provided to the tanker owner. On the dates set forth below, the following tankers will be prohibited, based upon their respective ages, from trading in U.S. waters, except that they may trade in U.S. waters until 2015 if their operations are limited to discharging at the Louisiana Offshore Oil Port or off-loading by 13 lightering within authorized lightering zones more than 60 miles off-shore. Lightering is the process by which vessels at sea off-load their cargo to smaller vessels for ultimate delivery to the discharge port.
VESSEL* DATE OF PROHIBITION - ------- ------------------- GENMAR COMMANDER............................................ January 1, 2010 GENMAR SPARTIATE............................................ January 1, 2010 GENMAR ZOE.................................................. January 1, 2010 GENMAR MACEDON.............................................. January 1, 2010 GENMAR ALTA................................................. January 1, 2010 GENMAR HARRIET.............................................. January 1, 2010 GENMAR SUN.................................................. January 1, 2013 GENMAR BOSS................................................. January 1, 2013 GENMAR GABRIEL.............................................. January 1, 2015 GENMAR GEORGE............................................... January 1, 2015
- ------------------------ * The GENMAR PRINCE, KENTUCKY, WEST VIRGINIA, GENMAR LEONIDAS AND GENMAR NESTOR, WHICH WE HAVE AGREEMENTS TO ACQUIRE AT OR AFTER THE CLOSING OF THIS OFFERING, WILL BE PROHIBITED FROM TRADING IN U.S. WATERS BEGINNING IN 2002, 2003, 2004, 2015 AND 2015 RESPECTIVELY. THESE FIVE SHIPS DO NOT CURRENTLY OPERATE IN THE ATLANTIC BASIN. As our vessels reach their phase-out dates, we may need to spend significant funds to reconfigure, retrofit or redeploy them or to sell them and purchase alternative vessels. We cannot assure you that these expenditures will be economically justified or that we will have or be able to obtain sufficient funds to make these repairs or purchases. If we scrap or sell vessels without replacement, our cash flow and our market position could be negatively affected. AMENDMENTS TO THE INTERNATIONAL MARITIME ORGANIZATION'S REGULATIONS, WHICH ARE EXPECTED TO TAKE EFFECT IN SEPTEMBER 2002, COULD FORCE US TO PHASE-OUT OR RETROFIT OUR SINGLE-HULL VESSELS SOONER THAN EXPECTED, WHICH WOULD ADVERSELY AFFECT OUR OPERATIONS. Under IMO regulations that are expected to take effect in 2002, all of our single-hull vessels would be phased-out by 2015 unless they were fitted with a second hull. The amendments to the International Convention for the Prevention of Marine Pollution from Ships 1973, as amended, include a time-table for the phase-out of single-hull tankers that accelerates the phase-out schedule previously set by the IMO in 1992. Of the nine single-hull vessels which we are acquiring at the time of this offering or have agreements to acquire at or after the closing of this offering, one would be phased out by 2006 and two would be phased out by 2007. The remaining six vessels would be phased out by 2015, unless we retrofit them to comply with the new IMO standards. Although the IMO's member countries have not yet ratified the amendments, the amendments are expected to be approved. If it is not economically feasible to retrofit our tankers to comply with these new regulations, the accelerated phase-out of our single-hull tankers may negatively impact our operations and cash flow. OUR REVENUES MAY BE ADVERSELY AFFECTED IF WE DO NOT SUCCESSFULLY EMPLOY OUR VESSELS. We seek to deploy our vessels between spot charters and time charters in a manner that optimizes our revenues. A spot charter is generally a contract to carry a specific cargo from a load port to a discharge port for a fixed dollar amount. A time charter is generally a contract to charter a vessel for a fixed period of time at a set daily rate. As of March 31, 2001, four of our vessels were contractually committed to time charters, with the remaining terms of these charters expiring on dates between February 2002 and August 2003. In connection with our acquisition of one vessel which we have an 14 agreement to acquire after the closing of this offering, we intend to assume an additional time charter which expires in January 2002. Although these time charters provide steady revenues, they also limit the portion of our fleet available for spot voyages during an upswing in the tanker industry cycle, when spot voyages might be more profitable. We earned approximately 65.4% and 50.4% of our net voyage revenue from spot charters for the three months ended March 31, 2001, and for the year ended December 31, 2000, respectively. The spot charter market is highly competitive, and spot charter rates may fluctuate dramatically based on tanker and oil supply and demand and other factors. We cannot assure you that future spot charters will be available at rates that will allow us to operate our vessels profitably. WE MAY FACE UNEXPECTED REPAIR COSTS FOR OUR VESSELS. Repairs and maintenance costs are difficult to predict with certainty and may be substantial. Many of these expenses are not covered by our insurance. Large repair expenses could decrease our profits and reduce our liquidity. ARRESTS OF OUR VESSELS BY MARITIME CLAIMANTS COULD CAUSE A SIGNIFICANT LOSS OF EARNINGS FOR THE RELATED OFF-HIRE PERIOD. Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by "arresting" or "attaching" a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could result in a significant loss of earnings for the related off-hire period. In addition, in jurisdictions where the "sister ship" theory of liability applies, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. In countries with "sister ship" liability laws, claims might be asserted against us, any of our subsidiaries or our vessels for liabilities of other vessels that we own. OUR VESSELS MAY BE REQUISITIONED BY GOVERNMENTS WITHOUT ADEQUATE COMPENSATION. A government could requisition for title or seize our vessels. Under requisition for title, a government takes control of a vessel and becomes its owner. Also, a government could requisition our vessels for hire. Under requisition for hire, a government takes control of a vessel and effectively becomes its charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Although we as owner would be entitled to compensation in the event of a requisition, the amount and timing of payment would be uncertain. WE DEPEND ON OUR KEY PERSONNEL AND MAY HAVE DIFFICULTY ATTRACTING AND RETAINING SKILLED EMPLOYEES. The loss of the services of any of our key personnel or our inability to successfully attract and retain qualified personnel, including ships' officers, in the future could have a material adverse effect on our business, financial condition and operating results. Our future success depends particularly on the continued service of Peter C. Georgiopoulos, our Chairman and Chief Executive Officer. PORTIONS OF OUR INCOME MAY BE SUBJECT TO U.S. TAX. We may be subject to U.S. tax equal to 2% of our gross shipping income attributable to transportation beginning or ending in the United States. Shipping income for this purpose is income derived from the operation or leasing of our vessels and from the performance of services directly related thereto. We will be exempt from this tax if our shipping income qualifies for a statutory 15 exemption. We will likely not qualify for the exemption in any taxable year in which 50% or more of our stock is held at any time during that taxable year by persons owning 5% or more of our stock unless more than 50% of our stock is owned by 10% shareholders who are U.S. persons. We believe that we will qualify for the exemption in this taxable year. However, we may not qualify for the exemption in this taxable year or in the future if persons purchase 5% or more of our stock in this offering or in the market thereafter and as a result holders of 5% or more of our stock hold an aggregate of 50% or more of our stock. In addition, the income of some of our subsidiaries, including the predecessor entities which own 14 of our vessels, may not qualify for the exemption for the current year if the offering does not occur on or prior to July 1, of this year. On average, in 2000, 1999 and 1998, approximately 98% of our average time charter revenues and 99% of our average spot charter revenues were attributable to transportation beginning or ending in the United States. If we had not been exempt from U.S. tax during 2000, 1999 and 1998, our U.S. tax during those years for the 14 vessels owned by our predecessor entities would have been 2% of those revenues for those years, or, based on our entire revenues, could have been as much as approximately $2.6 million, $1.4 million and $1.2 million in 2000, 1999 and 1998, respectively. INCREASES IN TONNAGE TAXES ON OUR VESSELS WOULD INCREASE THE COSTS OF OUR OPERATIONS. Our vessels are currently registered under the following flags: Bermuda, Liberia, Malta, Panama, the Republic of the Marshall Islands and Norwegian International Ship Registry. These jurisdictions impose taxes based on the tonnage capacity of each of the vessels registered under their flag. The tonnage taxes imposed by these countries could increase and, thus, the costs of our operations would increase. OUR INCORPORATION UNDER THE LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS MAY LIMIT THE ABILITY OF OUR SHAREHOLDERS TO PROTECT THEIR INTERESTS. Our corporate affairs are governed by our Articles of Incorporation and Bylaws and by the Marshall Islands Business Corporations Act. The provisions of the Marshall Islands Business Corporations Act resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the Marshall Islands Business Corporations Act. For example, the rights and fiduciary responsibilities of directors under the laws of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. While the Marshall Islands Business Corporations Act does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction. IT MAY NOT BE POSSIBLE FOR OUR INVESTORS TO ENFORCE U.S. JUDGMENTS AGAINST US. We are incorporated in the Republic of the Marshall Islands and most of our subsidiaries are organized in the Cayman Islands. Substantially all of our assets and those of our subsidiaries are located outside the United States. As a result, it may be difficult or impossible for U.S. investors to serve process within the United States upon us or to enforce judgment upon us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries in which we or our subsidiaries are incorporated or where our or the assets of our subsidiaries are located (i) would enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable U.S. federal and state securities laws or (ii) would enforce, in original actions, liabilities against us or our subsidiaries based upon these laws. 16 RISKS RELATED TO THIS OFFERING IF WE CANNOT COMPLETE THE PURCHASE FOR CASH OF THE SEVEN AFRAMAX TANKERS AFTER THE CLOSING OF THIS OFFERING, WE MAY INVEST OR SPEND THE PROCEEDS OF THIS OFFERING IN WAYS WITH WHICH YOU DO NOT AGREE AND IN WAYS THAT MAY NOT YIELD A FAVORABLE RETURN. Although we have agreed to purchase seven Aframax tankers with a portion of the proceeds from the offering, it is possible that the sellers could breach the agreement or otherwise be unable to deliver all or some of the vessels or that the conditions to our purchase will not be satisfied. We will not close the purchase of any of these vessels before the closing of this offering. We will not escrow the proceeds from this offering and will not return the proceeds to you if we do not purchase these vessels. If we do not purchase some or all of these vessels, our management will have the discretion to apply the proceeds alternatively for general corporate purposes that may not be consistent with purchasing Aframax tankers. Shareholders may not deem the uses we select desirable. Our use of this portion of the proceeds may vary substantially from our currently planned uses. Investors in this offering will be relying on the judgment of our management with respect to the use of this portion of the proceeds. We cannot assure you that we will apply this portion effectively, nor can we assume that this portion will be invested in a manner that will yield a favorable return or any return at all. ANTI-TAKEOVER PROVISIONS IN OUR FINANCING AGREEMENTS AND OUR ORGANIZATIONAL DOCUMENTS COULD HAVE THE EFFECT OF DISCOURAGING, DELAYING OR PREVENTING A MERGER OR ACQUISITION, WHICH COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK. Several of our existing financing agreements impose restrictions on changes of control of our company and our ship-owning subsidiaries. These include requirements that we obtain the lenders' consent prior to any change of control and that we make an offer to redeem certain indebtedness before a change of control can take place. Several provisions of our amended and restated articles of incorporation and our bylaws could discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. These provisions include: - authorizing our board of directors to issue "blank check" preferred stock without shareholder approval; - providing for a classified board of directors with staggered, three-year terms; - prohibiting us from engaging in a "business combination" with an "interested shareholder" for a period of three years after the date of the transaction in which the person became an interested shareholder unless certain provisions are met; - prohibiting cumulative voting in the election of directors; - authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our common stock entitled to vote for the directors; - prohibiting shareholder action by written consent unless the written consent is signed by all shareholders entitled to vote on the action; - limiting the persons who may call special meetings of shareholders; and - establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings. 17 OUR COMMON STOCK PRICE MAY BE HIGHLY VOLATILE AND YOUR INVESTMENT IN OUR COMMON STOCK COULD DECLINE IN VALUE. Prior to this offering, there has been no public market for our common stock. After this offering, an active trading market in our common stock might not develop or if it does develop, might not continue. Additionally, the market price of our common stock may fluctuate significantly in response to many factors, many of which are beyond our control. You may not be able to resell your shares at or above the initial public offering price due to the risks and uncertainties described elsewhere in this "Risk Factors" section. In the past, following periods of volatility in the market price of a particular company's securities, securities class action litigation has often been brought against the company. We may become involved in this type of litigation in the future. Litigation of this type could be extremely expensive and divert management's attention and resources from running our company. THE RECIPIENTS OF SHARES OF OUR COMMON STOCK IN CONNECTION WITH OUR RECAPITALIZATION WILL STILL CONTROL A SIGNIFICANT PORTION OF OUR STOCK AFTER THE OFFERING. The recipients of shares of our common stock in connection with our recapitalization will own approximately 69.8% of our outstanding common stock after this offering, assuming the over-allotment option is not exercised. Should these parties act as a group, they would have the power to elect all of our directors and control the vote on substantially all other corporate matters without the approval of other shareholders, including those who purchase stock in this offering. This concentration in voting power may result in the ability of those shareholders to delay or prevent another party from acquiring or otherwise taking control of General Maritime. IF OUR RECAPITALIZATION TRANSACTION WERE INTEGRATED WITH THIS OFFERING, WE MIGHT BE LIABLE FOR CLAIMS FROM PARTICIPANTS IN THAT TRANSACTION. We formed our company by exchanging our common stock for equity securities and assets of shipowners and management companies through a recapitalization transaction which continued after we filed the Registration Statement in connection with this offering. This transaction is described under the caption "Recapitalization and Acquisitions." We believe that this recapitalization transaction will qualify as a private placement under the Securities Act. However, one or more of the participants exchanging securities or assets in this transaction may assert that the recapitalization transaction should be integrated with this offering, and thus requires registration under Section 5 of the Securities Act. If any of these participants were successful in bringing this type of action against us, it could obtain remedies which could include rescission of its exchange of assets or securities. Thus, successful participants could obtain return of the interests in vessels they contributed to our company. If successful participants no longer held the shares of common stock issued to them, the participants could obtain damages equal to the difference between the value of the interests in the vessels contributed by them in exchange for the shares of common stock issued to them, with interest, reduced by the amount received when the participant sold the shares, with interest and reduced by any income received by the participants on the shares of common stock sold. If a claim of this type were successful, it could be material to our assets and operating results. The owners of three vessels to be acquired for common stock after the closing of this offering are among those who might assert such a claim. We have obtained from each participant a waiver of the right to bring an action of this type and an agreement to contribute any benefit obtained from an action of this type to us. However, this waiver and agreement may not be enforceable as contrary to public policy. We understand that it is the view of the staff of the Securities and Exchange Commission that this waiver and agreement are not enforceable. Our management has not classified any of our outstanding shares outside of permanent shareholders' equity (as temporary equity) because it has concluded that a successful assertion of a claim of rescission is remote. 18 FUTURE SALES OF OUR COMMON STOCK COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DECLINE. The market price of our common stock could decline due to sales of a large number of shares in the market after this offering, including sales of shares by our large shareholders, or the perception that these sales could occur. These sales could also make it more difficult or impossible for us to sell equity securities in the future at a time and price that we deem appropriate to raise funds through future offerings of common stock. Our existing security holders will become eligible to sell their shares in the public market after their lock-up agreements expire 180 days after the closing of this offering. We have entered into registration rights agreements with many of our existing shareholders that entitle them to have an aggregate of 29,000,000 shares registered for sale in the public market. All of those shares could be sold into the public market after one year pursuant to Rule 144 under the Securities Act. We also intend to register on Form S-8 an aggregate of 2,900,000 shares issuable upon exercise of options we have granted to purchase common stock, or reserved for issuance under our equity compensation plans, after the date of this prospectus. You should read the discussion under the heading entitled "Shares Eligible for Future Sale" for further information concerning potential sales of our shares after this offering. YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION. The initial public offering price per share of our common stock is substantially higher than the pro forma net tangible book value per share of our outstanding common stock, after adjustments for our acquisition of five vessels which we have agreed to acquire at the closing of this offering, the stock of United Overseas Tankers Ltd. which we are acquiring at the time this offering and 10 vessels that we have agreements to acquire following the closing of this offering, as if these transactions occurred on March 31, 2001. As a result, investors purchasing common stock in this offering at an assumed initial public offering price of $18.00 per share, will incur immediate and substantial dilution in the net tangible book value of their common stock of approximately $5.33 per share. To the extent we raise additional capital by issuing equity securities in the future, you and our other shareholders may experience substantial dilution and future investors may be granted rights superior to those of our current shareholders. THIS PROSPECTUS CONTAINS STATEMENTS ABOUT OUR FUTURE THAT INVOLVE THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND ELSEWHERE IN THIS PROSPECTUS. THESE STATEMENTS ARE OFTEN ACCOMPANIED BY WORDS SUCH AS "BELIEVES," "ANTICIPATES," "ESTIMATES," "INTENDS," "PLANS," "EXPECTS" AND SIMILAR EXPRESSIONS. THESE STATEMENTS INCLUDE, WITHOUT LIMITATION, STATEMENTS ABOUT MARKET OPPORTUNITY, OUR STRATEGY AND OUR EXPECTATIONS, PLANS AND OBJECTIVES. IN ADDITION TO THIS SECTION, THESE STATEMENTS MAY BE FOUND IN THE SECTIONS OF THIS PROSPECTUS ENTITLED "PROSPECTUS SUMMARY," "USE OF PROCEEDS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," "INDUSTRY" AND "BUSINESS," AND IN THIS PROSPECTUS GENERALLY. OUR ACTUAL RESULTS WILL LIKELY DIFFER, PERHAPS MATERIALLY, FROM THOSE ANTICIPATED IN THESE STATEMENTS AS A RESULT OF VARIOUS FACTORS, INCLUDING ALL THE RISKS DISCUSSED ABOVE AND ELSEWHERE IN THIS PROSPECTUS. BECAUSE OF THESE UNCERTAINTIES, YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE STATEMENTS. EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE LAWS OR RULES, WE DO NOT INTEND TO UPDATE ANY OF THESE FACTORS OR TO PUBLICLY ANNOUNCE THE RESULT OF ANY REVISIONS TO ANY OF THESE STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. 19 IMPORTANT ASSUMPTIONS IN THIS PROSPECTUS REFERENCES TO OUR COMPANY IN THIS PROSPECTUS We recently changed our name from "General Maritime Corporation" to "General Maritime Ship Holdings Ltd." We intend to change our name back to "General Maritime Corporation" at the time of the effectiveness of the registration statement of which this prospectus is a part. Accordingly, we sometimes refer to our company in this prospectus as "General Maritime" or "General Maritime Corporation." Unless the context otherwise requires, our company, as described in this prospectus, assumes that, at the time of this offering, we are making the acquisitions set forth below in connection with the recapitalization described under the section of this prospectus entitled "Recapitalization and Acquisitions." - We are acquiring for shares of our common stock another company currently named General Maritime Corporation, a corporation wholly-owned by our founder, Peter C. Georgiopoulos, which we refer to in this prospectus as the "old General Maritime Corporation." - We are acquiring for shares of our common stock seven limited partnerships owning 14 vessels for which corporations owned by Peter C. Georgiopoulos acted as managing general partner. - We are acquiring for cash United Overseas Tankers Ltd., a corporation which provides certain technical operational services to the old General Maritime Corporation. We have an agreement to acquire, at the closing of this offering, for shares of our common stock and repayment of indebtedness, five special purpose entities owned by affiliates of Wexford Capital LLC which own five vessels commercially managed by the old General Maritime Corporation. We anticipate that promptly following the closing of this offering, we will close the acquisitions of three vessels for shares of our common stock and the repayment of indebtedness secured by these vessels and of seven vessels for cash, subject to the terms and conditions of the related acquisition agreements. At the time of this offering, we are issuing the shares for the three vessels to an escrow agent to hold until the closing of our acquisitions of these vessels. The 14 vessels previously owned by limited partnerships for which affiliates of Peter C. Georgiopoulos acted as managing general partner and the old General Maritime Corporation and their operating results are reflected in the financial statements and historical financial and statistical information in this prospectus, unless otherwise indicated. The remaining vessels and United Overseas Tankers Ltd. are not so reflected. OVER-ALLOTMENT OPTION GRANTED TO THE UNDERWRITERS HAS NOT BEEN EXERCISED Unless otherwise indicated, all information in this prospectus assumes that the over-allotment option that our selling shareholders granted to the underwriters has not been exercised. USE OF TERMS AND REFERENCES IN THIS PROSPECTUS You should consider the following information regarding our use of terms and references in this prospectus. Unless otherwise specifically noted or the context requires otherwise, - the term "world tanker fleet" refers to all tankers greater than 10,000 deadweight tons but does not include combined carriers such as oil/bulk/ore carriers; - except for statistics relating to the ranking of the size of our fleet and where otherwise explicitly stated, combined carriers such as oil/bulk/ore carriers are not included in the world tanker fleet statistics in this prospectus; - all dollar references are to U.S. dollars; and - deadweight ton, or dwt, figures supplied by Clarkson Research Studies are in dwt metric tons except where they refer to a size range or limit, where they are expressed in dwt long tons. 20 USE OF STATISTICAL DATA, GRAPHS AND TABLES IN THIS PROSPECTUS Clarkson Research Studies has provided us with industry statistical data, graphs and tables that we use in the discussion of the Suezmax and Aframax tanker markets contained in the sections of this prospectus entitled "Prospectus Summary," "The Industry" and "Business." We believe that the statistical data, graphs and tables supplied by Clarkson are accurate in all material respects, and we have relied upon these statistical data, graphs and tables for purposes of this prospectus. With respect to the statistical data, graphs and tables supplied by Clarkson, Clarkson has advised us that: - some industry data included in this discussion is based on estimates or subjective judgments in circumstances where data for actual market transactions either does not exist or is not publicly available; - the published information of other maritime data collection experts may differ from this data; and - while Clarkson has taken reasonable care in the compilation of the industry statistical data, graphs and tables and believes them to be correct, data compilation is subject to limited audit and validation procedures. USE OF PROCEEDS The net proceeds to us from the sale of the 7,000,000 shares of our common stock in this offering are estimated to be approximately $113.7 million. We will not receive any proceeds from the sale of shares by the selling shareholders pursuant to the underwriters' over-allotment option, if it is exercised. See discussion contained in the section entitled "Principal and Selling Shareholders." These estimates are based on an assumed initial public offering price of $18.00 per share after deducting underwriting discounts and commissions of 7%, or approximately $8.8 million, and estimated offering expenses payable by us. The principal purposes of this offering are to reduce our debt, acquire vessels and a technical management company, increase our capitalization and financial flexibility, provide a public market for our common stock and facilitate access to the public capital markets. We currently anticipate using approximately $70.1 million of the net proceeds of this offering to reduce our outstanding borrowings under our loan facilities. These loan facilities mature in 2002 and bore an average interest rate of 8.94% for the year 2000. We also currently anticipate using approximately $37.4 million as partial payment for the seven vessels that we have an agreement to acquire and approximately $6.2 million to acquire United Overseas Tankers Ltd., a technical management corporation located in Piraeus, Greece. If we do not purchase some or all of the vessels that we have agreements to purchase, we will have the discretion to apply the proceeds for general corporate purposes and for the acquisition of additional vessels or businesses. Although we regularly consider potential acquisitions of vessels and entities that operate vessels, we do not currently have any arrangements to make any of these types of acquisitions, except as set forth in this prospectus. See the discussions contained in the sections entitled "Recapitalization and Acquisitions--Acquisitions" and "Description of Indebtedness." Pending the use of the net proceeds as described above, we intend to invest the net proceeds of this offering not used in short-term, investment-grade, interest-bearing securities. 21 DIVIDEND POLICY We have never paid cash dividends on our common stock. We do not anticipate paying cash dividends in the foreseeable future. In addition, some of our loan agreements contain covenants which restrict our ability to pay dividends. We intend to retain any future earnings to fund the continued growth and development of our company. CAPITALIZATION The following table sets forth our cash and capitalization as of March 31, 2001: - on an actual basis derived from our financial statements, reflecting 14 vessels as of March 31, 2001; - on a pro forma basis to reflect the acquisition of five vessels, the assets of United Overseas Tankers Ltd. and the effects of this offering at an assumed initial public offering price of $18.00 per share, including the application of a portion of the proceeds to repay approximately $70.1 million of our existing indebtedness, as if these transactions occurred on March 31, 2001; and - on a pro forma as adjusted basis to reflect the adjustments mentioned above and the acquisition of 10 vessels that we have agreed to acquire, subject to the terms and conditions of the related acquisition agreements, and the incurrence of the related long-term debt as if these transactions occurred on March 31, 2001; see discussion under the headings "Recapitalization and Acquisitions" and "Description of Indebtedness." You should read this table in conjunction with the financial statements and the notes to those statements and the other financial information included elsewhere in this prospectus.
AS OF MARCH 31, 2001 ------------------------------------------- PRO FORMA ACTUAL PRO FORMA (1) AS ADJUSTED (2) --------- ------------- --------------- (UNAUDITED) (UNAUDITED) (dollars in thousands) Cash and cash equivalents................................... $ 31,625 $ 78,992 $ 36,117 --------- -------- -------- Long-term debt.............................................. 222,699 211,599 427,199 Shareholders' equity (3): Common stock, $.01 par value per share: 75,000,000 shares authorized, actual, pro forma and pro forma as adjusted; shares issued and outstanding, 21,503,906, 29,000,000 and 36,000,000, respectively............................ 215 343 360 Preferred stock, $.01 par value per share: 5,000,000 shares authorized, actual; no shares issued and outstanding............................................. -- -- -- Additional paid-in capital.................................. 157,584 374,912 406,049 Retained earnings........................................... 50,868 50,868 50,868 Accumulated other comprehensive loss........................ (1,145) (1,145) (1,145) --------- -------- -------- Total shareholders' equity.............................. 207,522 424,977 456,132 --------- -------- -------- Total capitalization.................................... $ 430,221 636,576 883,331 ========= ======== ========
- ---------------------------------- (1) Reflects our actual capitalization on a pro forma basis for the following: (i) the effects of this offering including the application of a portion of the proceeds to repay approximately $70.1 million of indebtedness, (ii) the acquisition of five vessels for shares of our common stock and the incurrence of approximately $59.0 million in new borrowings used to repay existing indebtedness associated with those vessels, and (iii) the acquisition of United Overseas Tankers Ltd. These transactions have been reflected as if they occurred on March 31, 2001. (2) Reflects our capitalization on an as adjusted pro forma basis for the following: (i) the adjustments described in footnote 1 above, (ii) the acquisition of seven vessels for $212.5 million of which $37.4 million is from proceeds from our initial public offering and the incurrence of approximately $175.1 million of new borrowings, and (iii) the acquisition of three vessels for shares of our common stock and repayment of approximately $40.5 million of the indebtedness associated with these vessels. These transactions have been reflected as if they occurred on March 31, 2001. (3) The number of outstanding shares excludes 760,000 shares of common stock reserved for issuance upon the exercise of outstanding options issued pursuant to our 2001 Stock Incentive Plan. 22 DILUTION As of March 31, 2001, our historical net tangible book value, which reflects our 14 vessels for which affiliates of Peter C. Georgiopoulos acted as managing general partner and the old General Martime Corporation, was approximately $207.5 million, or $9.65 per share of common stock. Historical net tangible book value per share is determined by dividing historical net tangible book value, consisting of total tangible assets less total liabilities, by 21,503,906 shares, the number of shares of common stock outstanding at March 31, 2001 as reflected in our financial statements. As of March 31, 2001, our pro forma net tangible book value was approximately $342.5 million, or $11.81 per share of common stock. This pro forma net tangible book value gives effect to our acquisition of five vessels, the assets of United Overseas Tankers Ltd. and 10 vessels we have agreed to acquire, subject to the terms and conditions of the related acquisition agreements, as if these transactions occurred on March 31, 2001. Pro forma net tangible book value per share is determined by dividing pro forma net tangible book value, consisting of pro forma total tangible assets less pro forma total liabilities, by 29,000,000 shares, the pro forma number of shares of common stock outstanding. Without taking into effect any other changes in pro forma net tangible book value after March 31, 2001, and after giving effect to the sale of the common stock offered hereby at an assumed initial public offering price of $18.00 per share and the application of the net proceeds of this offering, the pro forma as adjusted net tangible book value would have been $456.1 million, or $12.67 per share. This represents an immediate increase in pro forma net tangible book value of $0.86 per share to existing shareholders and immediate and substantial dilution in pro forma as adjusted net tangible book value of $5.33 per share to new investors who purchase shares in this offering. The following table illustrates this dilution: Assumed initial public offering price per share............. $ 18.00 ------- Historical net tangible book value per share as of March 31, 2001...................................................... $ 9.65 Increase per share attributable to our additional acquisitions.............................................. 2.16 ------ Pro forma net tangible book value per share before the offering as adjusted for the aforementioned acquisitions.............................................. 11.81 Increase per share attributable to new investors assuming the completion of the aforementioned acquisitions......... 0.86 ------ Pro forma as adjusted net tangible book value per share after the offering as adjusted for the aforementioned acquisitions.............................................. 12.67 ------- Dilution in net tangible book value per share to new investors assuming the completion of the aforementioned acquisitions.............................................. $ 5.33 =======
If the underwriters' over-allotment option is exercised in full there will be no dilution in net tangible book value per share to new investors. The following table summarizes, on a pro forma as adjusted basis as of March 31, 2001, the differences between the total consideration paid and the average price per share paid by the existing shareholders and the new investors based on an assumed initial public offering price of $18.00 per share:
SHARES TOTAL CONSIDERATION --------------------- ----------------------- AVERAGE PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE ---------- -------- ------------ -------- ------------- Existing shareholders (1)............... 29,000,000 80.6% $292,728,686 70% $ 10.09 New investors........................... 7,000,000 19.4 126,000,000 30 18.00 ---------- ---- ------------ --- Total............................... 36,000,000 100% $418,728,686 100% ========== ==== ============ ===
- ------------------------------ (1) Represents recipients of shares of our common stock in connection with our recapitalization. 23 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA The following selected consolidated financial and other data should be read in connection with, and are qualified by reference to, the financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 1999 and 1998 and for the period from February 1, 1997 through December 31, 1997 and the consolidated balance sheet data as of December 31, 1999 and 1998 are derived from our consolidated financial statements, which have been audited by Ernst & Young LLP, independent auditors. The consolidated statements of operations data for the year ended December 31, 2000 and the consolidated balance sheet data as of December 31, 2000 are derived from financial statements which have been audited by Deloitte & Touche LLP. The selected consolidated financial data as of and for the three months ended March 31, 2001 and 2000 have been derived from our unaudited financial statements and, in the opinion of our management, include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of such information. Operating results for the three months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the entire year. The fleet data for each of the periods described above are derived from our operational data. Historical results are not necessarily indicative of results that may be expected for any future period.
ELEVEN THREE MONTHS ENDED YEAR ENDED MONTHS MARCH 31, DECEMBER 31, ENDED ------------------------- ---------------------------------------- DECEMBER 31, 2001 2000 2000 1999 1998 1997 (1) ----------- ----------- ----------- ------------ ----------- ------------ INCOME STATEMENT DATA (dollars in thousands) Voyage revenues............................ $ 48,042 $ 22,766 $ 132,012 $ 71,476 $ 62,031 $ 12,436 Operating expenses Voyage expenses.......................... 7,004 4,783 23,996 16,742 10,247 465 Direct vessel expenses................... 6,809 5,126 23,857 19,269 15,684 3,010 General and administrative expenses...... 1,399 1,064 4,792 3,868 2,828 1,101 Depreciation and amortization............ 6,881 5,390 24,808 19,810 16,493 3,402 Other expenses........................... -- -- 5,272 -- -- -- ----------- ----------- ----------- ------------ ----------- ------------ Total operating expenses............... 22,093 16,363 82,725 59,689 45,252 7,978 Operating income....................... 25,949 6,403 49,287 11,787 16,779 4,458 Net interest expense................... 4,192 4,391 19,005 16,525 14,654 3,016 ----------- ----------- ----------- ------------ ----------- ------------ Net income (loss)...................... $ 21,757 $ 2,012 $ 30,282 $ (4,738) $ 2,125 $ 1,442 =========== =========== =========== ============ =========== ============ BALANCE SHEET DATA at end of period (dollars in thousands) Cash....................................... $ 31,581 NA $ 23,523 $ 6,842 $ 6,411 $ 3,291 Total assets............................... 441,624 NA 438,922 351,146 345,633 194,340 Long-term debt Long-term debt (2)....................... 222,699 NA 241,785 202,000 241,625 135,550 Weighted average long-term debt for period................................. 228,564 NA 233,010 219,008 203,398 46,679 Total shareholders' equity................. 207,522 NA 186,910 125,878 99,650 55,543 OTHER FINANCIAL DATA (dollars in thousands) EBITDA (3)................................. $ 32,830 $ 11,793 $ 74,095 $ 31,597 $ 33,272 $ 7,860 Net cash provided by operating activities............................... 27,054 6,429 47,720 12,531 15,665 6,042 Net cash used in investing activities...... (15) (199) (85,865) (18,688) (159,206) (189,716) Net cash provided by financing activities............................... (18,981) (4,564) 54,826 6,588 146,661 186,965 Capital expenditures Vessel purchases, gross.................. -- -- (85,500) (18,200) (158,700) (189,716) Drydocking............................... (167) (230) (3,168) (4,074) (250) --
24
ELEVEN THREE MONTHS ENDED YEAR ENDED MONTHS MARCH 31, DECEMBER 31, ENDED ------------------------- ---------------------------------------- DECEMBER 31, 2001 2000 2000 1999 1998 1997 (1) ----------- ----------- ----------- ------------ ----------- ------------ FLEET DATA Total number of vessels at end of period... 14 11 14 11 10 6 Weighted average number of vessels (4)(6)................................... 13.8 11.0 12.6 10.3 8.3 1.7 Total voyage days for fleet (5)(6)......... 1,245 1,001 4,474 3,603 3,030 620 Total calendar days for fleet (6)(7)....... 1,260 1,001 4,599 3,756 3,030 623 Fleet utilization (8)...................... 98.8% 100% 97.3% 95.9% 100% 99.5% AVERAGE DAILY RESULTS Time charter equivalent (9)................ $ 32,962 $ 17,965 $ 24,143 $ 15,191 $ 17,090 $ 19,308 Total vessel operating expenses (10)....... 6,514 6,184 6,223 6,103 6,109 6,599 EBITDA (3)................................. 26,056 11,781 16,111 8,412 10,981 12,616 PER SHARE DATA(11) (dollars in thousands, except share data) Net income (loss).......................... 21,757 2,012 30,282 (4,738) 2,125 1,442 Basic.................................... 1.01 0.13 1.60 (0.33) 0.21 0.41 Fully diluted............................ 1.01 0.13 1.60 (0.33) 0.21 0.41 Weighted average for basic and fully diluted.................................. 21,503,906 15,805,393 18,946,950 14,337,246 10,289,533 3,536,727
- ------------------------ NA Not Applicable. (1) Since our inception on February 1, 1997. (2) Long-term debt is inclusive of current portion of debt for the relevant period. In 1999, it excludes a $15 million note payable to one of our shareholders which was cancelled and contributed to our capital in June 2000. (3) EBITDA represents net income from continuing operations before net interest expense, income tax expense, depreciation and amortization expense. EBITDA is included because it is used by certain investors to measure a company's financial performance. EBITDA is not an item recognized by GAAP, and should not be considered as an alternative to net income or any other indicator of our performance required by GAAP. The definition of EBITDA used in this offering may not be comparable to that used by other companies. (4) Weighted average number of vessels is the average number of vessels that constituted our fleet for that year, as measured by the sum of the number of days each vessel was part of our fleet divided by the number of calendar days in that year. (5) Voyage days are the total days our vessels were in our possession, net of off-hire days associated with major repairs, drydockings or special surveys. (6) Reflects an extra day in 2000, which was a leap year. (7) Calendar days are the total days our vessels were in our possession, including off-hire days associated with major repairs, drydockings or special surveys. (8) Fleet utilization is the percentage of time that the vessels in our possession were available for revenue generating voyages and is determined by dividing voyage days by calendar days. (9) Time charter equivalent is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating time charter equivalent is consistent with industry standards and is determined by dividing net voyage revenues by voyage days for the time period. Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of commissions and port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter. (10) Total vessel operating expenses are our total expenses associated with operating our vessels. We determine total vessel operating expenses by dividing the sum of direct vessel expenses and general and administrative expenses, net of non-recurring organizational, legal and other one-time fees, by calendar days. (11) Basic earnings/(loss) per share are computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the year. Diluted income/(loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. There were no dilutive securities outstanding during the years presented. 25 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We are a newly formed company that, at the time of this offering, will own 14 vessels through the assembly of our predecessor entities. The following discussion relates to the financial condition and results of operations of our predecessor entities and the 14 vessels they owned. The following is a discussion of our financial condition and results of operations for the three months ended March 31, 2001 and 2000, and for the years ended December 31, 2000, 1999 and 1998. Although the date of our inception was February 1, 1997, we commenced vessel operations with the acquisition of our first vessel on May 20, 1997. You should consider the foregoing when reviewing our consolidated financial statements and this discussion. You should read this section together with our consolidated financial statements including the notes to those financial statements for the periods mentioned above. Our vessels are available for employment on time charters and in the spot market. Under a time charter, we place the vessel at the charterer's disposal for a set period of time at a specified daily rate. Under a time charter, the charterer pays voyage expenses such as port, canal and fuel costs. Under a spot charter, we provide the vessel for the transportation of crude oil between specific ports for an agreed upon total amount. Under spot charters, we pay voyage expenses such as port, canal and fuel costs. We strive to optimize the performance of our fleet through the deployment of our vessels in both time charters and in the spot market. We actively monitor macroeconomic trends as well as governmental and environmental regulations that may affect tanker rates and influence our deployment decisions. Vessels operating on time charters, provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot market during periods characterized by favorable market conditions. Vessels operating in the spot market generate revenues that are less predictable but may enable us to capture increased profit margins during improvements in tanker rates. In the past we have also deployed our vessels on bareboat contracts whereby we lease vessels for a set period of time and the charterer bears all operating expenses including crew and drydocking costs. Although revenues and net voyage revenues are lower under this type of contract, operating income is generally equivalent to operating income generated from time charters during comparable periods. Our voyage revenues and voyage expenses are recognized ratably over the duration of the voyages and the lives of the charters, while direct vessel expenses are recognized when incurred. We recognize the revenues of time charters that contain rate escalation schedules at the average rate over the life of the contract. We depreciate our vessels on a straight-line basis from their date of initial delivery from the shipyard over a 25-year period with a residual value currently calculated on the basis of $125 per lightweight ton (a standard unit of measurement for the weight of an empty vessel). We capitalize our drydock expenses, and amortize these costs on a straight-line basis over the life of the survey cycle, which is generally a two to five year period. Our expenditures for minor maintenance, repairs and replacements are expensed as incurred. Operating results for the three months ended March 31, 2001 and the years ended December 31, 2000, 1999 and 1998 reflect changes in the size of our fleet, changes in tanker rates during these periods and the deployment of our vessels on time charter or in the spot market. For discussion and analysis purposes only, we evaluate the performance of our company using net voyage revenues. Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of commissions and port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter. We believe that presenting voyage 26 revenues, net of voyage expenses, neutralizes the variability created by unique costs associated with particular voyages or the deployment of vessels on time charter or on the spot market and presents a more accurate representation of the revenues generated by our vessels. Because the limited partnerships through which we previously operated were generally treated as flow through entities for U.S. income tax purposes during the period discussed below, our income was passed through to the partners of the limited partnerships. Accordingly, liability for U.S. income tax is not reflected in our financial statements or the discussion below. We have not included a pro forma discussion showing the effects of any projected U.S. income taxes as we do not expect to be subject to the U.S. federal income tax on a net income basis upon completion of this offering or the U.S. federal tax equal to 2% of our gross shipping income from transportation beginning or ending in the United States. For further information, see the discussion under the headings "Risk Factors" and "Tax Considerations" in this prospectus. RESULTS OF OPERATIONS Margin analysis for the indicated items as a percentage of net voyage revenues for the three months ended March 31, 2001 and 2000 and the years ended December 31, 2000, 1999 and 1998 is set forth in the table below. INCOME STATEMENT MARGIN ANALYSIS (% of Net Voyage Revenues)
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, ---------------------- ------------------------------------ 2001 2000 2000 1999 1998 -------- -------- -------- -------- -------- Net voyage revenues (1)............................. 100% 100% 100% 100% 100% Operating expenses Direct vessel expenses.............................. 16.6 28.5 22.1 35.2 30.3 General and administrative expenses................. 3.4 5.9 4.4 7.1 5.5 Depreciation and amortization....................... 16.8 30.0 23.0 36.2 31.8 Other expenses...................................... -- -- 4.9 -- -- ----- ----- ----- ----- ----- Total operating expenses............................ 36.8 64.4 54.4 78.5 67.6 ----- ----- ----- ----- ----- Operating income.................................... 63.2 35.6 45.6 21.5 32.4 Net interest expenses............................... 10.2 24.4 17.6 30.2 28.3 ----- ----- ----- ----- ----- Net income (loss)................................... 53.0 11.2 28.0 (8.7) 4.1 ===== ===== ===== ===== ===== EBITDA.............................................. 80.0 65.6 68.6 57.7 64.3
- ------------------------ (1) Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of commissions and port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter. "Same Fleet" data consist of financial and operational data only from those vessels that were part of our fleet for both complete periods under comparison. We feel that this presentation facilitates a more accurate analysis of our operational and financial performance between periods. Same Fleet data is provided for comparison of the three months ended March 31, 2001 and 2000, the years ended December 31, 2000 and 1999 and the years ended December 31, 1999 and 1998. The vessels which comprise the Same Fleet for periods not directly compared are not necessarily the same. As a result, comparison of Same Fleet data provided for periods which are not directly compared in the table below will not yield meaningful results. Corporate income and expenses, which include general and administrative, depreciation and net interest expenses, that are not directly attributable to a vessel are allocated to vessels on a pro rata basis. Same Fleet financial and operational data as well as margin analysis for the indicated items as a percentage of net voyage revenues for the same periods are set forth in the table below. 27 SAME FLEET ANALYSIS
SAME FLEET SAME FLEET SAME FLEET THREE MONTHS ENDED YEAR ENDED YEAR ENDED MARCH 31, DECEMBER 31, DECEMBER 31, ------------------- ------------------- ------------------- 2001 2000 2000 1999 1999 1998 -------- -------- -------- -------- -------- -------- INCOME STATEMENT DATA (dollars in thousands) Net voyage revenues (1).......... $30,062 $17,983 $78,006 $53,999 $35,867 $38,982 Operating expenses Direct vessel expenses........... 5,140 5,126 19,159 18,678 11,679 11,563 General and administrative expenses....................... 1,137 1,064 3,640 3,633 1,880 1,936 Depreciation and amortization.... 5,581 5,390 20,797 19,459 12,189 11,837 Other expenses................... -- -- 5,272 -- -- -- ------- ------- ------- ------- ------- ------- Total operating expenses......... 11,858 11,580 48,868 41,770 25,748 25,336 Operating income................. 18,204 6,403 29,138 12,229 10,119 13,646 Net interest expense............. 3,344 4,391 15,546 16,083 8,741 9,835 ------- ------- ------- ------- ------- ------- Net income....................... 14,860 2,012 $13,592 $(3,854) $ 1,378 $ 3,811 INCOME STATEMENT MARGIN ANALYSIS (% of net voyage revenues) Net voyage revenues (1).......... 100% 100% 100% 100% 100% 100% Operating expenses Direct vessel expenses........... 17.1 28.5 24.5 34.6 32.6 29.7 General and administrative expenses....................... 3.8 5.9 4.7 6.7 5.2 5.0 Depreciation and amortization.... 18.6 30.0 26.7 36.0 34.0 30.3 Other expenses................... 0.0 0.0 6.8 0.0 0.0 0.0 ------- ------- ------- ------- ------- ------- Total operating expenses......... 39.5 64.4 62.7 77.3 71.8 65.0 Operating income................. 60.5 35.6 37.3 22.7 28.2 35.0 Net interest expense............. 11.1 24.4 19.9 29.8 24.4 25.2 ------- ------- ------- ------- ------- ------- Net income....................... 49.4 11.2 17.4 (7.1) 3.8 9.8 ======= ======= ======= ======= ======= ======= EBITDA........................... 79.1 65.6 64.0 58.7 62.2 65.4 OTHER FINANCIAL DATA (dollars in thousands) EBITDA........................... 23,785 11,793 $49,935 $31,688 $22,308 $25,483 Net cash provided by operating activities..................... 18,692 6,428 32,583 13,480 11,332 13,573 Capital expenditures Drydocking....................... (37) (230) (2,675) (3,618) (3,618) (250) FLEET DATA Weighted average number of vessels........................ 10.9 11.0 10.0 10.0 6.0 6.0 Total voyage days for fleet...... 979 1,001 3,552 3,511 2,051 2,190 Total calendar days for fleet.... 990 1,001 3,660 3,650 2,190 2,190 Fleet utilization................ 98.9% 100% 97.0% 96.2% 93.7% 100% AVERAGE DAILY RESULTS TCE.............................. 30,707 17,965 $21,961 $15,380 $17,488 $17,800 Total vessel operating expenses....................... 6,341 6,185 6,223 6,054 6,120 6,164 EBITDA........................... 24,025 11,780 13,643 8,682 10,186 11,636
- ------------------------ (1) Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of commissions and port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter. 28 THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2000 NET VOYAGE REVENUES--Our net voyage revenues increased by approximately $23.0 million, or 128%, to approximately $41.0 million for the three months ended March 31, 2001 compared to approximately $18.0 million for the three months ended March 31, 2000. This increase is primarily due to changes in tanker rates and the overall growth of our fleet. The total increase in our net voyage revenues of approximately $23.0 million resulted from an increase of approximately $12.1 million in our Same Fleet revenues, and approximately $10.9 million from our acquisition of three vessels subsequent to March 31, 2000. Our fleet consisted of 14 vessels comprised of nine Aframax tankers and five Suezmax tankers for the three months ended March 31, 2001 compared to eleven vessels comprised of nine Aframax tankers and two Suezmax tankers for the three months ended March 31, 2000. We acquired the GENMAR ZOE in May 2000, the GENMAR MACEDON in June 2000 and the GENMAR SPARTIATE in July 2000. The annualized average size of our fleet increased 25.5% to 13.8 vessels for the three months ended March 31, 2001 compared to 11.0 vessels for the three months ended March 31, 2000. On an Overall Fleet Basis: - Our average daily time charter equivalent rate per vessel increased by approximately $15,000, or 83.5%, to approximately $32,950 for the three months ended March 31, 2001 compared to approximately $17,950 for the three months ended March 31, 2000. - Approximately $14.2 million, or 34.6%, of our net voyage revenue was generated by time charters and approximately $26.8 million, or 65.4%, was generated in the spot market for the three months ended March 31, 2001, compared to approximately $8.9 million, or 49.6%, of our net voyage revenue generated by time charters and approximately $9.1 million, or 50.4%, generated in the spot market for the three months ended March 31, 2000. - Our vessels operated an aggregate of 505 days, or 40.6%, on time charter contracts and 740 days, or 59.4%, in the spot market for the three months ended March 31, 2001, compared to 494 days, or 49.4%, on time charter contracts and 507 days, or 50.6%, in the spot market for the three months ended March 31, 2000. - Average daily time charter rates were approximately $28,100 for the three months ended March 31, 2001 compared to average daily time charter rates of approximately $18,050 for the three months ended March 31, 2000. This increase is due to the expiration of some of our time charters and the introduction of new contracts that reflect the time charter rates prevalent at that time. - Average daily spot rates were approximately $36,300 for the three months ended March 31, 2001 compared to average daily spot rates of approximately $17,850 for the three months ended March 31, 2000. This increase is the result of changes in tanker rates for the three months ended March 31, 2001 compared to the three months ended March 31, 2000. Of our net voyage revenues of approximately $41.0 million, approximately $30.1 million was attributable to our Same Fleet. Our Same Fleet for the periods ending March 31, 2001 and 2000 consisted of 11 vessels, nine Aframax vessels and two Suezmax vessels. Same Fleet net voyage revenues increased by approximately $12.1 million, or 67.2%, to approximately $30.1 million for the three months ended March 31, 2001 compared to approximately $18.0 million for the three months ended March 31, 2000. This increase is attributable to changes in spot and time charter tanker rates for the three months ended March 31, 2001 compared to those for the three months ended March 31, 2000. On a Same Fleet Basis: - Our average daily time charter equivalent rate per vessel increased by approximately $12,750, or 70.9%, to approximately $30,700 for the three months ended March 31, 2001 compared to approximately $17,950 for the three months ended March 31, 2000. 29 - Approximately $14.2 million, or 47.2%, of our net voyage revenue was generated by time charters and approximately $15.9 million, or 52.8%, was generated in the spot market for the three months ended March 31, 2001, compared to approximately $8.9 million, or 49.6%, of our net voyage revenue generated by time charters and approximately $9.1 million, or 50.4%, generated in the spot market for the three months ended March 31, 2000. - Our vessels operated an aggregate of 505 days, or 51.6%, on time charters and 474 days, or 48.4%, in the spot market for the three months ended March 31, 2001 compared to 494 days, or 49.4%, on time charters and 507 days, or 50.6%, in the spot market for the three months ended March 31, 2000. - Average daily time charter rates were approximately $28,850 for the three months ended March 31, 2001 compared to average daily time charter rates of approximately $18,650 for the three months ended March 31, 2000. This increase is due to changes in the deployment of Same Fleet vessels operating on time charters as well as the rates associated with new time charters. - Average daily spot rates were approximately $37,250 for the three months ended March 31, 2001 compared to average daily spot rates of approximately $17,750 for the three months ended March 31, 2000. This increase is the result of changes in the deployment of Same Fleet vessels operating in the spot market as well changes in tanker rates for the three months ended March 31, 2001 compared to the three months ended March 31, 2000. DIRECT VESSEL EXPENSES--Our direct vessel expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs increased by approximately $1.7 million, or 32.8% to approximately $6.8 million for the three months ended March 31, 2001 compared to approximately $5.1 million for the three months ended March 31, 2000. This increase is primarily due to the growth of our fleet. On a daily basis, our direct vessel expenses per vessel per day increased by approximately $300 to approximately $5,400 for the three months ended March 31, 2001 compared to approximately $5,100 for the three months ended March 31, 2000. This increase is primarily due to our aquisition of three Suezmax tankers during 2000 which are larger and more costly to operate than Aframax tankers. Same Fleet direct vessel expenses remained virtually unchanged at approximately $5.1 million for the three months ended March 31, 2001 and the three months ended March 31, 2000, Same Fleet daily direct vessel expenses were approximately $5,200 for the three months ended March 31, 2001 and for the three months ended March 31, 2000. GENERAL AND ADMINISTRATIVE EXPENSES--Our general and administrative expenses increased by approximately $0.3 million, or 31.5%, to approximately $1.4 million for the three months ended March 31, 2001 compared to approximately $1.1 million for the three months ended March 31, 2000. This increase is primarily due to an increase in payroll expenses reflecting the increase in the number of our personnel in connection with the growth of our fleet for three months ended March 31, 2001 compared to the three months ended March 31, 2000. DEPRECIATION AND AMORTIZATION--Our depreciation and amortization, which includes depreciation of our vessels as well as amortization of our drydocking and special survey costs and loan fees, increased by approximately $1.5 million, or 27.7%, to $6.9 million for the three months ended March 31, 2001 compared to approximately $5.4 million for the three months ended March 31, 2000. This increase is primarily due to the growth of our fleet as well as an additional amortization of approximately $0.2 million in drydocking costs for the three months ended March 31, 2001 compared to the three months ended March 31, 2000. NET INTEREST EXPENSE--Our net interest expense decreased by approximately $0.2 million, or 4.5%, to approximately $4.2 million for the three months ended March 31, 2001 compared to approximately $4.4 million for the three months ended March 31, 2000. This decrease is primarily the result of an 30 increase in our interest income due to the increase in operating cash flows for the three months ended March 31, 2001 compared to the three months ended March 31, 2000. NET INCOME--Net income consists of operating income less net interest expense. Our net income was approximately $21.8 million for the three months ended March 31, 2001 compared to a net income of approximately $2.0 million for the three months ended March 31, 2000. YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999 NET VOYAGE REVENUES--Our net voyage revenues increased by approximately $53.3 million, or 97.3%, to approximately $108.0 million for the year ended December 31, 2000 compared to approximately $54.7 million for the year ended December 31, 1999. This increase is primarily due to changes in tanker rates and the overall growth of our fleet. The total increase in our net voyage revenues of approximately $53.3 million resulted from an increase of approximately $24.0 million in our Same Fleet revenues, approximately $9.2 million from the full year of operations of our vessel acquired in 1999 and approximately $20.1 million from our acquisition of three vessels subsequent to December 31, 1999. Our fleet consisted of 14 vessels comprised of nine Aframax tankers and five Suezmax tankers for the year ended December 31, 2000 compared to eleven vessels comprised of nine Aframax tankers and two Suezmax tankers for the year ended December 31, 1999. We acquired the GENMAR ZOE in May 2000, the GENMAR MACEDON in June 2000 and the GENMAR SPARTIATE in July 2000. The annual average size of our fleet increased 22.4% to 12.6 vessels for the year ended December 31, 2000 compared to 10.3 vessels for the year ended December 31, 1999. ON AN OVERALL FLEET BASIS: - Our average daily time charter equivalent rate per vessel increased by approximately $8,950, or 58.9%, to approximately $24,150 for the year ended December 31, 2000 compared to approximately $15,200 for the year ended December 31, 1999. - Approximately $39.8 million, or 36.8%, of our net voyage revenue was generated by time charters and approximately $68.2 million, or 63.2%, was generated in the spot market for the year ended December 31, 2000, compared to approximately $33.0 million, or 60.4%, of our net voyage revenue generated by time charters and approximately $21.7 million, or 39.6%, generated in the spot market for the year ended December 31, 1999. - Our vessels operated an aggregate of 2,174 days, or 48.6%, on time charters and 2,300 days, or 51.4%, in the spot market for the year ended December 31, 2000, compared to 1,738 days, or 48.2%, on time charter contracts and 1,865 days, or 51.8%, in the spot market for the year ended December 31, 1999. - Average daily time charter rates were approximately $18,300 for the year ended December 31, 2000 compared to average daily time charter rates of approximately $19,000 for the year ended December 31, 1999. This decrease is due to the expiration of some of our time charters and the introduction of new contracts that reflect the time charter rates prevalent at that time. - Average daily spot rates were approximately $29,650 for the year ended December 31, 2000 compared to average daily spot rates of approximately $11,600 for the year ended December 31, 1999. This increase is the result of changes in tanker rates for the year ended December 31, 2000 compared to the year ended December 31, 1999. Of our net voyage revenues of approximately $108.0 million, approximately $78.0 million was attributable to our Same Fleet. Our Same Fleet for the periods ending December 31, 2000 and 1999 consisted of ten vessels, eight Aframax vessels and two Suezmax vessels. Same Fleet net voyage revenues increased by approximately $24.0 million, or 44.5%, to approximately $78.0 million for the year ended December 31, 2000 compared to approximately $54.0 million for the year ended 31 December 31, 1999. This increase is attributable to changes in spot and time charter tanker rates for the year ended December 31, 2000 compared to those for the year ended December 31, 1999. ON A SAME FLEET BASIS: - Our average daily time charter equivalent rate per vessel increased by approximately $6,600, or 42.8%, to approximately $21,950 for the year ended December 31, 2000 compared to approximately $15,350 for the year ended December 31, 1999. - Approximately $39.8 million, or 51.0%, of our net voyage revenue was generated by time charters and approximately $38.2 million, or 49.0%, was generated in the spot market for the year ended December 31, 2000, compared to approximately $33.0 million, or 61.1%, of our net voyage revenue generated by time charters and approximately $21.0 million, or 38.9%, generated in the spot market for the year ended December 31, 1999. - Our vessels operated an aggregate of 2,174 days, or 61.2%, on time charters and 1,378 days, or 38.8%, in the spot market for the year ended December 31, 2000 compared to 1,738 days, or 49.5%, on time charters and 1,773 days, or 50.5%, in the spot market for the year ended December 31, 1999. - Average daily time charter rates were approximately $18,300 for the year ended December 31, 2000 compared to average daily time charter rates of approximately $19,000 for the year ended December 31, 1999. This decrease is due to changes in the deployment of Same Fleet vessels operating on time charters as well as the rates associated with new time charters. - Average daily spot rates were approximately $26,850 for the year ended December 31, 2000 compared to average daily spot rates of approximately $11,800 for the year ended December 31, 1999. This increase is the result of changes in the deployment of Same Fleet vessels operating in the spot market as well as changes in tanker rates for the year ended December 31, 2000 compared to the year ended December 31, 1999. DIRECT VESSEL EXPENSES--Our direct vessel expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs increased by approximately $4.6 million, or 23.8% to approximately $23.9 million for the year ended December 31, 2000 compared to approximately $19.3 million for the year ended December 31, 1999. This increase is primarily due to the growth of our fleet. On a daily basis, our direct vessel expenses per vessel per day decreased by approximately $100 to approximately $5,200 for the year ended December 31, 2000 compared to approximately $5,100 for the year ended December 31, 1999. Same Fleet direct vessel expenses increased approximately $0.5 million to approximately $19.2 million for the year ended December 31, 2000 compared to approximately $18.7 million for the year ended December 31, 1999. Same Fleet daily direct vessel expenses increased approximately $100 to approximately $5,200 for the year ended December 31, 2000 from $5,100 for the year ended December 31, 1999. GENERAL AND ADMINISTRATIVE EXPENSES--Our general and administrative expenses increased by approximately $0.9 million, or 23.9%, to approximately $4.8 million for the year ended December 31, 2000 compared to approximately $3.9 million for the year ended December 31, 1999. This increase is primarily due to an increase in payroll expenses reflecting the increase in the number of our personnel in connection with the growth of our fleet for year ended December 31, 2000 compared to the year ended December 31, 1999. OTHER EXPENSES--During the fourth quarter of the year ended December 31, 2000, we expensed approximately $5.3 million in contract-termination fees and other related costs associated with the termination of three of our time charter contracts relating to two Suezmax tankers and one Aframax tanker. We had no such expense during the year ended December 31, 1999. The two Suezmax tankers were chartered through September 2001 and May 2002 at approximately $22,250 and $24,200, 32 respectively, per day. The termination of these two time charters will enable us to operate the two Suezmax vessels in the spot market upon their redelivery. We took delivery of the first Suezmax vessel in January 2001 and of the second in March 2001. During the fourth quarter of the year ended December 31, 2000, our Suezmax vessels operating in the spot market generated approximately $42,500 per day. We replaced the Aframax time charter, which was chartered through February 2002 at a rate of $18,750 per day, with a new time charter which is chartered through the same period at a rate of $24,300 per day. DEPRECIATION AND AMORTIZATION--Our depreciation and amortization, which includes depreciation of our vessels as well as amortization of our drydocking and special survey costs and loan fees, increased by approximately $5.0 million, or 25.2%, to $24.8 million for the year ended December 31, 2000 compared to approximately $19.8 million for the year ended December 31, 1999. This increase is primarily due to the growth of our fleet as well as an additional amortization of approximately $1.3 million in drydocking costs for the year ended December 31, 2000 compared to the year ended December 31, 1999. NET INTEREST EXPENSE--Our net interest expense increased by approximately $2.5 million, or 15.0%, to approximately $19.0 million for the year ended December 31, 2000 compared to approximately $16.5 million for the year ended December 31, 1999. This increase is primarily the result of new debt associated with the acquisition of vessels. NET INCOME--Net income consists of operating income less net interest expense. Our net income was approximately $30.3 million for the year ended December 31, 2000 compared to a net loss of approximately $4.7 million for the year ended December 31, 1999. YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998 NET VOYAGE REVENUES--Our net voyage revenues increased by approximately $2.9 million, or 5.7%, to approximately $54.7 million for the year ended December 31, 1999 compared to approximately $51.8 million for the year ended December 31, 1998. This increase is primarily due to changes in tanker rates, the transition of vessels operating on bareboat contracts to time charter contracts or in the spot market and the overall growth of our fleet. The total increase in our net voyage revenues of approximately $2.9 million resulted from a decrease of approximately $3.1 million in our Same Fleet revenues, approximately $5.3 million from the full year of operations of the four vessels acquired in 1998 and approximately $0.7 million from our acquisition of one vessel subsequent to December 31, 1998. Our fleet consisted of 11 vessels comprised of nine Aframax vessels and two Suezmax vessels for the year ended December 31, 1999 compared to ten vessels comprised of eight Aframax tankers and two Suezmax vessels for the year ended December 31, 1998. We acquired the GENMAR GABRIEL in September 1999. The annual average size of our fleet increased 24.1% to 10.3 vessels for the year ended December 31, 1999 compared to 8.3 vessels for the year ended December 31, 1998. ON AN OVERALL FLEET BASIS: - Our average daily time charter equivalent rate per vessel decreased by approximately $1,900, or 11.1%, to approximately $15,200 for the year ended December 31, 1999 compared to approximately $17,100 for the year ended December 31, 1998. - Approximately $33.0 million, or 60.4%, of our net voyage revenue was generated by time charters and approximately $21.7 million, or 39.6%, was generated in the spot market for the year ended December 31, 1999, compared to approximately $33.7 million, or 65.2%, of our net voyage revenue generated by time charters, approximately $16.6 million, or 32.1%, generated in the spot market and approximately $1.4 million, or 2.7%, generated by bareboat contracts for the year ended December 31, 1998. 33 - Our vessels operated an aggregate of 1,738 days, or 48.2%, on time charters, 1,865 days, or 51.8%, in the spot market for the year ended December 31, 1999, compared to 1,679 days, or 55.4%, on time charters, 1,208 days, or 39.9%, in the spot market and 143 days, or 4.7%, on bareboat contracts for the year ended December 31, 1998. - Average daily time charter rates were approximately $19,000 for the year ended December 31, 1999 compared to average daily time charter rates of approximately $20,100 for the year ended December 31, 1998. This decrease in average daily time charter rates is due to the expiration of some of our time charters as well as the introduction of new contracts that reflect the time charter rates prevalent at that time. - Average daily spot rates were approximately $11,600 for the year ended December 31, 1999 compared to average daily spot rates of approximately $13,700 for the year ended December 31, 1998. This decrease is the result of changes in tanker rates for the year ended December 31, 1999 compared to the year ended December 31, 1998. - We had no vessels operating on bareboat contracts for the year ended December 31, 1999. Average daily bareboat contract rates were approximately $10,000 for the year ended December 31, 1998. Of our net voyage revenues of approximately $54.7 million, approximately $35.9 million was attributable to our Same Fleet. Our Same Fleet for the years ending December 31, 1999 and 1998 consisted of six vessels, four Aframax vessels and two Suezmax vessels. Same Fleet net voyage revenues decreased approximately $3.1 million, or 8.0%, to approximately $35.9 million for the year ended December 31, 1999 compared to approximately $39.0 million for the year ended December 31, 1998. This decrease is attributable to changes in spot and time charter tanker rates for the year ended December 31, 1999 compared to those for the year ended December 31, 1998. Bareboat net voyage revenues were approximately $1.4 million for the year ended December 31, 1998. We had no bareboat contracts for the year ended December 31, 1999. ON A SAME FLEET BASIS: - Our average daily time charter equivalent rate per vessel decreased by approximately $300, or 1.8%, to approximately $17,500 for the year ended December 31, 1999 compared to approximately $17,800 for the year ended December 31, 1998. - Approximately $31.8 million, or 88.7%, of our net voyage revenue was generated by time charters and approximately $4.0 million, or 11.3%, was generated in the spot market for the year ended December 31, 1999, compared to approximately $28.4 million, or 72.8%, of our net voyage revenue generated by time charters, approximately $9.2 million, or 23.5%, generated in the spot market and approximately $1.4 million, or 3.7%, generated by bareboat contracts for the year ended December 31, 1998. - Our vessels operated an aggregate of 1,679 days, or 81.9%, on time charter contracts and 372 days, or 18.1%, in the spot market for the year ended December 31, 1999 compared to 1,410 days, or 64.4%, on time charters, 637 days, or 29.1%, in the spot market and 143 days, or 6.5%, on bareboat contracts for the year ended December 31, 1998. - Average daily time charter rates were approximately $19,300 for the year ended December 31, 1999 compared to average daily time charter rates of approximately $19,600 for the year ended December 31, 1998. This decrease is due to changes in Same Fleet vessels operating on time charter contracts as well as the daily rates associated with new contracts. - Average daily spot rates were approximately $10,500 for the year ended December 31, 1999 compared to average daily spot rates of approximately $14,400 for the year ended December 31, 34 1998. This decrease is the result of changes in tanker rates for the year ended December 31, 1999 compared to the year ended December 31, 1998. - We had no vessels operating on bareboat contracts for the year ended December 31, 1999. Average daily bareboat contract rates were approximately $10,000 for the year ended December 31, 1998. DIRECT VESSEL EXPENSES--Our direct vessel expenses increased by approximately $3.6 million, or 22.9% to $19.3 million for the year ended December 31, 1999 compared to approximately $15.7 million for the year ended December 31, 1998. This increase is primarily due to the growth of our fleet. On a daily basis, our direct vessel expenses per vessel per day decreased approximately $100 to approximately $5,100 for the year ended December 31, 1999 compared to approximately $5,200 for the year ended December 31, 1998. Same Fleet direct vessel expenses remained unchanged at approximately $11.6 million for both periods. Same Fleet daily direct vessel expenses were approximately $5,300 for the same periods. GENERAL AND ADMINISTRATIVE EXPENSES--Our general and administrative expenses increased by approximately $1.0 million, or 36.8%, to approximately $3.9 million for the year ended December 31, 1999 compared to approximately $2.8 million for the year ended December 31, 1998. This increase is primarily due to an increase in payroll expenses reflecting the increase in the number of our personnel in connection with the growth of our fleet for the year ended December 31, 1999 compared to the year ended December 31, 1998. DEPRECIATION AND AMORTIZATION--Our depreciation and amortization increased by approximately $3.3 million, or 20.1%, to approximately $19.8 million for the year ended December 31, 1999 compared to approximately $16.5 million for the year ended December 31, 1998, primarily as a result of the growth of our fleet for the year ended December 31, 1999 compared to the year ended December 31, 1998. NET INTEREST EXPENSE--Our net interest expense increased by approximately $1.9 million, or 12.8%, to approximately $16.5 million for the year ended December 31, 1999 compared to approximately $14.7 million for the year ended December 31, 1998. This increase is primarily the result of new debt associated with the acquisition of vessels. NET INCOME--We had a net loss of approximately $4.7 million for the year ended December 31, 1999 compared to net income of approximately $2.1 million for the year ended December 31, 1998. LIQUIDITY AND CAPITAL RESOURCES Since our formation, our principal source of funds has been equity contributions, cash flows from operating activities and long-term borrowings. Our principal use of funds has been capital expenditures to establish and grow our fleet, maintain the quality of our vessels, comply with international shipping standards and environmental laws and regulations, fund working capital requirements and make principal repayments on our outstanding loan facilities. We will rely upon operating cash flows as well as long-term borrowings, the proceeds of this offering and future offerings to implement our growth plans. We believe, although we cannot be certain, that our cash flows from operating activities, long-term borrowings and the proceeds of this and future offerings will be sufficient to meet our liquidity needs for the next 12 months. Our practice has been to acquire our vessels using a combination of funds received from equity investors and bank debt secured by mortgages on the vessels. From our inception in February 1997 through December 31, 2000 we acquired 14 vessels for an aggregate amount of approximately $452.1 million, which was financed by approximately $327.6 million in bank debt with the balance financed through equity contributions. We did not acquire any additional vessels or assume any additional debt during the three months ended March 31, 2001. Our business is capital intensive and 35 our future success will depend on our ability to maintain a high-quality fleet through the acquisition of newer vessels and the selective sale of older vessels. These acquisitions will be principally subject to our expectation of future market conditions as well as our ability to acquire vessels on favorable terms. We will need to finance these acquisitions through borrowings under existing or future loan facilities and other debt and equity financing, for which we have no current arrangements. In connection with our recapitalization and acquisitions, we will need a total of $318.2 million, including (i) $212.5 million to acquire seven vessels that we have agreements to acquire for cash following the closing of this offering, (ii) $59.0 million to repay indebtedness secured by five vessels that we are acquiring at the closing of this offering, (iii) $40.5 million to repay indebtedness secured by three vessels that we have agreements to acquire following the closing of this offering and (iv) $6.2 million to acquire United Overseas Tankers Ltd. at the time of this offering. We intend to obtain these funds and refinance our current bank indebtedness through proceeds from this offering, a new $300.0 million loan facility that we have a commitment from our lead bank to close at the closing of this offering, an additional $165.0 million loan facility that we are currently negotiating and cash from operations. See discussions under the headings "Recapitalization and Acquisitions" and "Description of Indebtedness." Our cash increased to approximately $31.6 million as of March 31, 2001 compared to approximately $23.5 million as of December 31, 2000. Our working capital is current assets minus current liabilities, including the current portion of long-term debt. Our working capital was approximately $6.1 million as of March 31, 2001, compared to a working capital deficit of approximately $4.0 million as of December 31, 2000. The current portion of long-term debt included in our current liabilities was approximately $33.4 million as of March 31, 2001 and approximately $33.1 million as of December 31, 2000. We believe that our future cash flows will satisfy our working capital needs. Our EBITDA, as defined in note 3 to the "Selected Consolidated Financial and Other Data," increased by approximately $21.0 million, or 178%, to approximately $32.8 million for the three months ended March 31, 2001 from approximately $11.8 million for the three months ended March 31, 2000. This increase is primarily due to the growth of our fleet as well as improvements in tanker rates for the three months ended March 31, 2001 compared to the three months ended March 31, 2000. Our EBITDA increased by approximately $42.5 million, or 135%, to approximately $74.1 million for the year ended December 31, 2000 from approximately $31.6 million for the year ended December 31, 1999. This increase is primarily due to the growth of our fleet, as well as improvements in tanker rates and the decrease in our vessel operating expenses as a percentage of net voyage revenues. On a daily basis, EBITDA per vessel increased by approximately $14,300, or 121%, to approximately $26,050 for the three months ended March 31, 2001 from approximately $11,750 for the three months ended March 31, 2000. On a daily basis, EBITDA per vessel increased by approximately $7,700, or 91.5%, to approximately $16,100 for the year ended December 31, 2000 from approximately $8,400 for the year ended December 31, 1999. Same Fleet EBITDA increased by approximately $12.0 million, or 102%, to approximately $23.8 million for the three months ended March 31, 2001 from approximately $11.8 million for the three months ended March 31, 2000. Same Fleet daily EBITDA increased to approximately $24,050 from approximately $11,800 for the same periods. Same Fleet EBITDA increased by approximately $18.2 million, or 57.6%, to approximately $49.9 million for the year ended December 31, 2000 from approximately $31.7 million for the year ended December 31, 1999. Same Fleet daily EBITDA increased to approximately $13,650 from approximately $8,700 for the same periods. We had a total of 12 outstanding loan facilities with an aggregate outstanding amount of approximately $222.7 million as of March 31, 2001 and approximately $241.8 million as of December 31, 2000. These loan facilities are grouped into seven packages, five of which consist of both senior and junior loan facilities, while two consist of only senior loan facilities. The seven senior loan 36 facilities had an aggregate outstanding amount of approximately $204.4 million as of March 31, 2001 and approximately $223.4 million as of December 31, 2000. The five junior loan facilities had an aggregate outstanding amount of approximately $18.4 million as of March 31, 2001 and December 31, 2000. These loan facilities have terms of between three and five years and were entered into at various dates between May 1997 and December 2000. The senior loan facilities require monthly or quarterly principal repayments with a final installment for the remaining outstanding balance payable at the maturity of each loan facility. The junior loan facilities require quarterly payments of interest only with the full principal payable at maturity. We intend to use our cash flows from our operations to satisfy our long-term debt. To the extent our cash flows are insufficient to satisfy our repayment obligation at the maturity of each loan facility, we will need to refinance the existing loan facilities or generate funds through the selective sale of certain vessels. 37 Our principal payments were approximately $19.1 million for the three months ended March 31, 2001 and approximately $30.7 million for the year ended December 31, 2000. Our annual principal payments scheduled through December 31, 2005 are as follows: Principal Payments (dollars in millions)
YEAR PRINCIPAL PAYMENT - ---- ----------------- 2001................. $ 33.1 2002................. $149.8 2003................. $ 16.9 2004................. $ 8.0 2005................. $ 34.0
Both senior and junior loan facilities charge a premium over the London Interbank Offered Rate, or LIBOR, with the premium for the senior loan facilities ranging from 1.125% to 2.0%, and the premium for the junior loan facilities being 3.0%. We entered into interest rate swap agreements at the time of most loan facilities to minimize the effects of changes in LIBOR rates during the term of the loan. The terms and conditions of our loan facilities require us to comply with certain restrictive covenants. We believe that these terms and conditions are consistent with loan facilities incurred by other shipping companies. These covenants include maintaining certain ratios such as: vessel market value to loan facility outstanding and EBITDA to interest expense as well as maintaining minimum levels of working capital and cash. There is also a cash sweep provision associated with one of our loan facilities that will automatically pay down that loan facility with excess cash. There are no cross default provisions between loan packages; however, there are cross default provisions between junior and senior loan facilities within the same loan package. Three of the loan packages are collateralized by more than one vessel. As of December 31, 2000, we were in default under several of our loan facility agreements for breaching covenants. The lenders waived their right to take action with respect to any of these defaults. The financial covenant breaches which were waived are set forth below: - we did not meet all of our working capital and cash balance requirements; and - some of our limited partnerships made intercompany loans, all of which were subsequently repaid in full. In addition, some of the covenants of our existing loan facility agreements were amended in December 2000 to reduce working capital and other requirements. We do not believe that we are currently in default under any of our loan facility agreements and do not currently expect that we will violate any of the covenants of our loan facility agreements through April 1, 2002. We have received a commitment letter from our lead bank pursuant to which it has agreed, subject to, among other things, the successful completion of this offering, to refinance all of our loan facilities with a proposed new loan facility in connection with the consummation of this offering. This new loan facility will have a lower interest rate than our current loan facilities and will provide us with greater flexibility to properly manage our cash flow. The new loan facility will be in the aggregate amount of $300.0 million, comprised of a $200.0 million term loan and a $100.0 million revolving credit facility, and will have a five-year maturity. It will contain the same type of covenants discussed above but the covenants will be based on aggregate values and financial data for the 20 vessels associated with this loan. The term loan will require us to make 20 quarterly principal repayments while the revolving credit facility will require us to pay the amounts outstanding upon maturity. Both the term loan and the revolving credit facility will bear an interest rate of 1.5% over LIBOR for the outstanding portion while 38 the revolving credit facility will require us to pay a fee of 0.625% over LIBOR for the unused portion. This new loan facility will be collateralized by all of the 19 vessels that we will acquire at the time of this offering and one of the vessels that we have an agreement to acquire following the closing of this offering. We intend to draw upon this new loan facility to repay indebtedness secured by six vessels we intend to acquire in connection with our recapitalization that were not owned by limited partnerships for which corporations owned by Peter C. Georgiopoulos acted as managing general partner. We also intend to borrow approximately $50.6 million under this new loan facility to help us acquire 10 vessels that we have agreements to acquire following the closing of this offering. The commitment letter with respect to this new loan facility will expire on June 28, 2001 if our initial borrowing under this loan facility is not completed by that date. Our principal repayments for the term loan of the new credit facility scheduled through its five-year maturity are as follows: Principal Payments (dollars in millions)
YEAR PRINCIPAL PAYMENT - ---- ----------------- 2001................. $ 23.0 2002................. $ 46.0 2003................. $ 41.0 2004................. $ 36.0 2005................. $ 36.0 2006................. $ 18.0
We have received a commitment letter from our lead bank pursuant to which it has agreed, subject to several terms and conditions, to provide us with an additional loan facility in connection with our proposed acquisition of seven Aframax tankers after the closing of this offering, similar to the new loan facility described above. The additional loan facility is expected to be in the aggregate amount of $165.0 million, comprised of a $115.0 million term loan and a $50.0 million revolving credit facility, and to have a five-year maturity. It is expected to contain the same type of covenants discussed above but the covenants will be based on aggregate values and financial data for nine of the 10 vessels that we have agreements to acquire following the closing of this offering. The term loan is expected to require us to make 20 quarterly principal repayments while the revolving credit facility is expected to require us to pay the amounts outstanding upon maturity. Both the term loan and the revolving credit facility are expected to bear an interest rate of 1.5% over LIBOR for the outstanding portion while the revolving credit facility will require us to pay a fee of 0.625% over LIBOR for the unused portion. This additional loan facility is expected to be collateralized by nine of the vessels that we will acquire following the closing of this offering. The commitment letter with respect to this additional loan facility will expire on June 29, 2001 if our initial borrowing under this loan facility is not completed by that date. Our principal repayments for the term loan of the additional credit facility scheduled through its five-year maturity are expected to be as follows: Principal Payments (dollars in millions)
YEAR PRINCIPAL PAYMENT - ---- ----------------- 2001................. $ 13.5 2002................. $ 27.0 2003................. $ 21.5 2004................. $ 16.0 2005................. $ 16.0 2006................. $ 21.0
39 In addition to vessel acquisition, other major capital expenditures include funding our maintenance program of regularly scheduled drydockings necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Although we have some flexibility regarding the timing of our drydockings, the costs are relatively predictable. The costs for 2000 were approximately $3.2 million. The drydocking costs for the existing fleet of 14 vessels through 2005 are anticipated to be as follows: Projected Drydocking Costs (dollars in millions)
PROJECTED COSTS --------------- 2001................. $1.7 2002................. $1.7 2003................. $0.5 2004................. $2.0 2005................. $5.3
Our ability to meet this maintenance schedule will depend on our ability to generate sufficient cash flows from operations or to secure additional financing. Net cash provided by operating activities increased 321% to approximately $27.1 million for the three months ended March 31, 2001, compared to approximately $6.4 million for the three months ended March 31, 2000. This increase is primarily attributable to our increase in net income. We had net income of approximately $21.8 million for the three months ended March 31, 2001 compared to net income of approximately $2.0 million for the three months ended March 31, 2000. Net cash used in investing activities decreased to approximately $15,000 for the three months ended March 31, 2001 compared to approximately $0.2 million for the three months ended March 31, 2000. This decrease is primarily due to our reduction in capital expenditures relating to existing vessels of approximately $0.2 million in additions to vessels for the three months ended March 31, 2000. We did not have this expense during the three months ended March 31, 2001. Net cash used by financing activities was approximately $19.0 million for the three months ended March 31, 2001 compared to approximately $4.6 million for the three months ended March 31, 2000. The increase in cash used in financing activity relates to our principal payments of long term debt during the three months ended March 31, 2001 compared to the three months ended March 31, 2000. The changes in the components of financing activities are as follows: - Net proceeds from borrowings under long-term debt were approximately $0.5 million for the three months ended March 31, 2000. We did not receive proceeds from borrowings during the three months ended March 31, 2001. - Principal repayments of long-term debt were approximately $19.1 million for the three months ended March 31, 2001 compared to approximately $5.3 million for the three months ended March 31, 2000. This change is the result of the overall change in the level of our long-term debt, the amount and timing of our principal repayments associated with our long-term debt. In addition, we made unscheduled repayments of long-term debt associated with a loan facility covenant of approximately $10.9 million for the three months ended March 31, 2001. Net cash provided by operating activities increased 281% to approximately $47.7 million for the year ended December 31, 2000, compared to approximately $12.5 million for the year ended December 31, 1999. This increase is primarily attributable to our increase in net income. We had net income of approximately $30.3 million for the year ended December 31, 2000 compared to net loss of approximately $4.7 million for the year ended December 31, 1999. Net cash used in investing activities increased to approximately $85.9 million for the year ended December 31, 2000 compared to approximately $18.7 million for the year ended December 31, 1999. This increase is primarily due to our approximately $85.5 million acquisition of three vessels for the 40 year ended December 31, 2000 compared to our approximately $18.2 million acquisition of one vessel for the year ended December 31, 1999. Net cash provided by financing activities was approximately $54.8 million for the year ended December 31, 2000 compared to approximately $6.6 million used by financing activities for the year ended December 31, 1999. The increase in proceeds from financing activity relates to our capital expenditures during the year ended December 31, 2000 compared to the year ended December 31, 1999. The changes in the components of financing activities are as follows: - Net proceeds from borrowings under long-term debt were approximately $70.5 million for the year ended December 31, 2000 compared to approximately $15.0 million for the year ended December 31, 1999. The debt was incurred to partially finance the acquisition of three vessels for the year ended December 31, 2000 compared to our acquisition of one vessel for the year ended December 31, 1999. - Principal repayments of long-term debt were approximately $30.7 million for the year ended December 31, 2000 compared to approximately $39.6 million for the year ended December 31, 1999. This change is the result of the overall change in the level of our long-term debt, the amount and timing of our principal repayments associated with our long-term debt. In addition, we made unscheduled repayments of long-term debt associated with a loan facility covenant of approximately $6.4 million for the year ended December 31, 2000 compared to approximately $23.6 million for the year ended December 31, 1999. - Equity contributions from investors were approximately $15.5 million for the year ended December 31, 2000, compared to approximately $31.0 million for the year ended December 31, 1999. The equity contributions during the later period were used to partially finance the acquisition of three vessels. Those during the earlier period were used for the unscheduled repayment of long-term debt. Net cash provided by operating activities decreased 20.0% to approximately $12.5 million for the year ended December 31, 1999 compared to approximately $15.7 million for the year ended December 31, 1998. This increase is primarily attributable to the growth of our fleet. Net cash used in investing activities decreased to approximately $18.7 million for the year ended December 31, 1999 compared to approximately $159.2 million for the year ended December 31, 1998. This decrease was the result of our purchase of one vessel for approximately $18.2 million for the year ended December 31, 1999 compared to our purchase of four vessels for approximately $158.7 million for the year ended December 31, 1998. Net cash provided by financing activities was approximately $6.6 million for the year ended December 31, 1999 compared to approximately $146.7 million provided by financing activities for the year ended December 31, 1998. The decrease in proceeds from financing activities relates to our capital expenditures during the year ended December 31, 1999 compared to the year ended December 31, 1998. The changes in the components of financing activities are as follows: - Net proceeds from a shareholder's loan were approximately $15.0 million for the year ended December 31, 1999. The debt was incurred to partially finance the acquisition of one vessel compared to approximately $119.0 million for the year ended December 31, 1998, which was incurred to partially finance the acquisition of four vessels. - Principal repayments of long-term debt were approximately $39.6 million for the year ended December 31, 1999 compared to approximately $13.0 million for the year ended December 31, 1998. This change is the result of the overall change in the level of our long-term debt, the amount and timing of the principal repayments associated with our long-term debt. In addition, we made unscheduled repayments of long-term debt of approximately $23.6 million associated 41 with a loan facility covenant for the year ended December 31, 1999. There were no such repayments for the year ended December 31, 1998. - Equity contributions from investors were approximately $31.0 million for the year ended December 31, 1999, compared to approximately $42.0 million for the year ended December 31, 1998. The equity contributions during the later period were used for the unscheduled repayment of long-term debt and to partially finance the acquisition of one vessel. Those during the earlier period were used to partially finance the acquisition of four vessels. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS INTEREST RATE RISK We are exposed to various market risks, including changes in interest rates. The exposure to interest rate risk relates primarily to our debt. At March 31, 2001 and December 31, 2000, we had approximately $222.7 million and $241.8 million, respectively, of floating rate debt with margins over LIBOR ranging from 1.125% to 3.0%. We use interest rate swaps to manage the impact of interest rate changes on earnings and cash flows. The differential under these swap agreements to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense. As of March 31, 2001 and December 31, 2000, we had entered into interest rate swap agreements having aggregate notional amounts of $80.9 million and $85.5 million, respectively, which effectively fixes LIBOR on a like amount of principal at rates ranging from 6.2% to 7.0%. Increases in LIBOR would increase our interest expense to the extent it affects the $141.8 million and $156.3 million of floating rate debt that was not hedged at March 31, 2001 and December 31, 2000, respectively. A one percent increase in LIBOR would increase interest expense by $1.4 million per year from March 31, 2001 and $1.6 million per year from December 31, 2000.
CARRYING AMOUNT -------------------- CONTRACT FAIR AMOUNT ASSET LIABILITY VALUE - -------------------------------------------------------- -------- --------- -------- (dollars in thousands) DECEMBER 31, 2000 Interest Rate Swap Agreements........................... $ 85,450 $ -- $ 662 Debt.................................................... $241,785 $241,785 $241,785 MARCH 31, 2001 Interest Rate Swap Agreements........................... $ 80,850 $ 1,145 $ 1,145 Debt.................................................... $222,699 $222,699 $222,699
FOREIGN EXCHANGE RATE RISK The international tanker industry's functional currency is the U.S. dollar. As virtually all of our revenues and most of our operating costs are in U.S. dollars, we believe that our exposure to foreign exchange risk is insignificant. 42 THE INDUSTRY OVERVIEW Crude oil tankers transport crude oil from points of production to points of consumption, typically oil refineries. Customers include oil companies, oil traders, large oil consumers, petroleum product producers, government agencies and storage facility operators. Additional tanker transportation is required for bulk movements of refined petroleum products. Demand for oil tankers is influenced by many factors including international economic activity, geographic changes in oil production and consumption, oil price levels and inventory policies of the major oil and oil trading companies. Additionally, the carrying capacity of the international tanker fleet, or tanker supply, is a critical determinant in pricing for tanker transportation services. Crude oil can be transported under spot charters or time charters. A spot charter is generally a contract to a carry specific cargo from a load port to a discharge port for a fixed dollar amount. A time charter is generally a contract to charter a vessel for a fixed period of time at a set daily rate. Under spot charters, the vessel owner pays voyage-related expenses such as port, canal and fuel costs. Under time charters, those costs are paid by the charterer. Under both types of charters, the operator is responsible for the vessel's maintenance and operations, including providing the crew, and maintaining, repairing and insuring the vessel. Alternatively, vessels can be chartered under "bareboat" contracts whereby the charterer is responsible for the vessel's maintenance and operations, as well as all voyage-related expenses. Pricing of crude oil transportation services occurs in a highly competitive global tanker charter market. Although some business is conducted directly between ship owners and charterers, typically one or more brokers act as intermediaries in most transactions. Tankers are chartered around the clock in several shipping centers, including London, New York, Oslo, Singapore and Tokyo. Time charters, as well as vessel sale and purchase transactions, are generally negotiated through brokers in the same centers. INDUSTRY TRENDS We believe that several factors are converging to significantly alter the tanker business during the next several years. These factors include consolidation among tanker owners and operators, the acceleration of scrapping of most of the vessels built in the mid-1970s, increased awareness of the need for quality tonnage and tanker operators as a result of heightened environmental concerns, and changes in world oil demand. CONSOLIDATION The seaborne crude oil transportation business is highly fragmented. Seaborne transportation of crude oil and other petroleum products is provided by two main types of operators: fleets owned by independent ship owners and captive fleets of oil companies (both private and state-owned). According to Clarkson Research Studies, as of March 31, 2001, independent companies owned approximately 80.4% of current world tanker capacity of vessels larger than 10,000 deadweight tons, or dwt (a standard unit of measurement of a vessel's cargo capacity), with the balance being owned by oil companies and state-owned fleets. According to Clarkson Research Studies, as of March 31, 2001, there were approximately 565 beneficial owners of tankers larger than 10,000 dwt with a total world tanker fleet of approximately 3,430 vessels, or 296.2 million dwt. The industry over the the past several years has undergone meaningful consolidation through mergers, acquisitions and joint marketing arrangements among tanker owners. According to Clarkson Research Studies, as of March 31, 2001, the top 10 tanker and combined carrier owners accounted for approximately 26.4% of the world tanker fleet of vessels larger than 10,000 dwt, as measured by dwt, up from 18.7% in 1997. 43 AGING FLEET A significant portion of the world tanker fleet was built and delivered in the mid-1970s. The average rate of newbuilding deliveries from 1974 to 1976 was nearly four times higher than the average newbuilding delivery rate from 1980 to 2000. The following chart depicts the world tanker fleet development during the past 30 years. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC World Tanker Fleet Development
YEAR DELIVERIES(1) SCRAPPINGS(1) FLEET SIZE(2) (IN MILLIONS OF DWT) 1970 21 0.8 136.5 1971 20.8 0.6 156.3 1972 20.8 2.3 176.2 1973 28.5 1.4 194.1 1974 41.2 2.1 220.3 1975 46 8.2 259.3 1976 40.2 10.1 296.4 1977 20.3 8.4 325.6 1978 10.5 13.4 336.3 1979 7.9 6.2 332.4 1980 7 7.9 332.3 1981 8.7 12.8 329.3 1982 6.3 23.4 324.5 1983 5.4 23.6 305.3 1984 3.8 20 286.2 1985 4.5 25.8 268.6 1986 7 10.8 245.3 1987 5.8 6.6 241.1 1988 7.3 2.4 239.8 1989 9 1.2 244.9 1990 9.1 2.7 252.6 1991 11.9 2.5 259 1992 16.4 10 266.1 1993 17.5 11.8 272.2 1994 10.5 12.4 277 1995 11.6 10.8 273.4 1996 12.1 6 273.4 1997 8.2 3.5 277.2 1998 13.2 6.5 279.1 1999 19.9 16.7 284.4 2000 21.2 13.9 287.1
Source: Clarkson Research Studies (1) Deliveries and Scrappings are annual rates (2) Fleet Size is as of Beginning of Year The significant tanker deliveries during the mid-1970s now contribute to an aging world tanker fleet, approximately 28.8% of which, based on deadweight tons, or dwt, was 20 years of age or older as of March 31, 2001, as shown in the chart below. PERCENT OF WORLD TANKER FLEET 20 YEARS AND OLDER EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1991 7.80% 1992 8.60% 1993 9.30% 1994 10.90% 1995 17.60% 1996 27.20% 1997 34.40% 1998 36.70% 1999 36.20% 2000 32.30% 2001 28.70%
Source: Clarkson Research Studies. Data includes tankers over 10,000 dwt. Data is as of beginning of year, except for 2001 which is as of March 31. 44 FOCUS ON SAFETY A key trend in the tanker industry during the past several years has been the growing emphasis on environmental protection through legislation and regulations such as the U.S. Oil Pollution Act of 1990, or OPA 90, and regulations promulgated by the International Maritime Organization. The seaborne oil transportation industry has historically been subject to regulation by national authorities and through international conventions. Since the EXXON VALDEZ oil spill of 1989 there has been heightened environmental concern as evidenced by international conventions and protocols, classification society procedures and requirements of protection and indemnity associations and charterers. In December 1999, a highly publicized accident involving the 24-year-old single-hull tanker ERIKA occurred off the coast of France, spilling approximately 2.9 million gallons (69,000 barrels) of crude oil into the sea. We believe these factors have increased demand for higher quality tanker construction, management, operation, maintenance and repair. Oil companies which act as charterers, terminal operators, shippers and receivers have recently paid higher charter rates for modern tonnage. They continue to periodically inspect vessels and monitor companies for compliance with their quality and safety standards. We believe that the increasingly stringent regulatory environment, and the emphasis on quality and environmental protection, will accelerate the obsolescence of older, lower quality tankers and provide a competitive advantage to companies with high quality management that operate modern tankers. We also believe the increasing selectiveness of the oil companies will contribute to further industry consolidation among tanker owners and operators. U.S. OIL IMPORTS Over the past 15 years, U.S. net imports of crude oil have increased at a compounded annual growth rate of 7.5%. We believe this increase has been driven by rising levels of petroleum consumption amid declining U.S. crude oil production. Since 1985, U.S. crude oil production has declined in the aggregate by 35.0%. Over the next 15 years, total crude oil imports are projected to increase at a compounded annual growth rate of 2.0%. We believe this trend will support continued demand for crude oil tanker services in the Atlantic basin. The following table provides an overview of the U.S. petroleum market during the past 15 years and as forecasted for the next 15 years. U.S. PETROLEUM MARKET OVERVIEW (millions of barrels per day)
PERCENTAGE CHANGE 1985 1990 1995 2000 2005E 2010E 2015E 1985-2000 ---- ---- ---- ---- ---- ---- ---- ----- Domestic Crude Production.................. 9.0 7.4 6.6 5.8 5.7 5.2 5.1 (35.0)% Natural Gas Plant Liquids Production....... 1.6 1.6 1.8 1.9 2.1 2.4 2.6 18.6 % ---- ---- ---- ---- ---- ---- ---- ----- Total Petroleum Production............... 10.6 9.0 8.4 7.7 7.8 7.6 7.7 (26.8)% Net Crude Oil Imports...................... 3.0 5.8 7.1 8.9 10.6 11.5 11.9 196.4 % Net Petroleum Product Imports.............. 1.3 1.4 0.8 1.2 1.6 2.4 3.3 (9.2)% ---- ---- ---- ---- ---- ---- ---- ----- Total Petroleum Imports.................. 4.3 7.2 7.9 10.1 12.2 13.9 15.2 134.6 % Other U.S. Petroleum Supply................ 0.8 0.8 1.4 1.7 1.2 1.1 1.3 95.5 % ---- ---- ---- ---- ---- ---- ---- ----- Total U.S. Petroleum Supply.............. 15.7 17.0 17.7 19.5 21.2 22.6 24.2 23.8 % ==== ==== ==== ==== ==== ==== ==== ===== Source: U.S. Energy Information Administration--Petroleum Supply Monthly, February 2001 and Annual Energy Outlook 2001 COMPOUNDED COMPOUNDED ANNUAL ANNUAL GROWTH GROWTH RATE RATE 1985-2000 2000-2015E ---- ---- Domestic Crude Production.................. (2.8)% (0.9)% Natural Gas Plant Liquids Production....... 1.1 % 2.2 % ---- ---- Total Petroleum Production............... (2.1)% 0.0 % Net Crude Oil Imports...................... 7.5 % 2.0 % Net Petroleum Product Imports.............. (0.6)% 7.2 % ---- ---- Total Petroleum Imports.................. 5.8 % 2.8 % Other U.S. Petroleum Supply................ 4.6 % (1.9)% ---- ---- Total U.S. Petroleum Supply.............. 1.4 % 1.5 % ==== ==== Source: U.S. Energy Information Administrat
45 TYPES OF TANKERS The oil tanker fleet is generally divided into six major categories of vessels, based on carrying capacity. In order to benefit from economies of scale, tanker charterers transporting crude oil will typically charter the largest possible vessel, taking into consideration port and canal size restrictions and optimal cargo lot sizes. The six types of vessels, categorized accordingly to their size in dwt long tons, are: - Ultra Large Crude Carriers, or ULCCs, of approximately 320,000 dwt or more; - Very Large Crude Carriers, or VLCCs, of approximately 200,000 to 320,000 dwt; - Suezmax tankers of approximately 120,000 to 200,000 dwt; - Aframax tankers of approximately 80,000 to 120,000 dwt; - Panamax tankers of approximately 60,000 to 80,000 dwt; and - Small tankers (such as Handysize) of less than approximately 60,000 dwt. ULCCs and VLCCs are the largest vessels in the world tanker fleet. They typically transport crude oil in long-haul trades, mainly from the Arabian Gulf to Western Europe and the United States, via the Cape of Good Hope, and Asia. According to Clarkson Research Studies, during 2000, long-haul crude oil trades accounted for 31.4% of total seaborne imports to the United States, and as of March 31, 2001, the combined cargo capacity of ULCCs and VLCCs represented approximately 42.4% of the total world tanker fleet of vessels over 10,000 dwt, measured by dwt. While the ULCC/VLCC market differs from smaller size tanker markets, the ULCCs and VLCCs, given their capacities, influence the tanker charter market in general. Suezmax and Aframax vessels are considered mid-sized tankers. Suezmax tankers engage in long- and medium-haul crude oil trades, such as from West Africa and the North Sea to the East Coast and Gulf Coast of the United States. Aframax vessels generally engage in both medium- and short-haul trades and carry crude oil or petroleum products. As of March 31, 2001, data compiled by Clarkson Research Studies showed that there were 532 Aframax and 284 Suezmax tankers in the world tanker fleet, accounting for an aggregate of 92.3 million dwt and approximately 30.2% of world oil tanker cargo capacity of vessels larger than 10,000 dwt. Unlike smaller vessels such as Panamax and Handysize tankers, Aframax and Suezmax vessels are large enough to allow them to benefit from economies of scale in some regional markets. They also have access to a wide range of ports, many of which are not accessible by larger vessels such as ULCCs and VLCCs, and are particularly well-suited for trading in regional markets, including the Atlantic basin. Panamax and smaller tankers mostly transport petroleum products in short- to medium-haul trades. Besides tankers, oil/bulk/ore carriers (vessels which are capable of carrying either crude oil or dry bulk cargoes) may carry oil. Except for statistics relating to the ranking of the size of our fleet and where explicitly stated, these oil/bulk/ore carriers are not included in the tanker fleet statistics in this prospectus. According to Clarkson Research Studies, as of March 31, 2001, approximately 77.4% of all oil/bulk/ore carriers larger than 10,000 dwt were transporting oil, and these vessels represented approximately 3.8% of the world tanker fleet larger than 10,000 dwt, based on total cargo capacity. 46 TANKER DEMAND Tanker demand derives from a combination of factors including world oil supply and demand, where the oil is produced and where it is refined or consumed. Tanker demand is generally expressed in "ton-miles" and is measured as the product of (a) the amount, or tonnage, of crude oil transported in tankers and (b) the distance over which this oil is transported. Tonnage of oil shipped is primarily a function of global oil consumption, which is driven by general economic forces as well as the long-term impact of oil prices on the location and related volume of oil production. Tonnage of oil shipped is also influenced by the cost and availability of transportation alternatives such as pipelines. The distance over which oil is transported is the most variable element of the ton-mile demand equation. It is determined by seaborne trading and distribution patterns, which are influenced principally by the location of production and the optimal economic distribution of that production for refining and consumption. Seaborne trading patterns also are influenced by geopolitical events that divert tankers from normal trading patterns, as well as by inter-regional oil trading activity created by global oil supply and demand imbalances. Tankers, particularly older vessels, are also used as "floating storage" by oil companies and oil traders, notably during times of supply uncertainty. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC TON MILES VS. WORLD TANKER FLEET
TON-MILES FLEET SIZE Year (in billions) (in millions of dwt) 1971 6,654.00 156.3 1972 7,720.00 176.2 1973 9,207.00 194.1 1974 9,661.00 220.3 1975 8,885.00 259.3 1976 10,199.00 296.4 1977 10,408.00 325.6 1978 9,561.00 336.3 1979 6,452.00 332.4 1980 8,219.00 332.3 1981 7,193.00 329.3 1982 5,212.00 324.5 1983 4,478.00 305.3 1984 4,508.00 286.2 1985 4,007.00 268.6 1986 4,640.00 245.3 1987 4,671.00 241.1 1988 5,065.00 239.8 1989 5,736.00 244.9 1990 6,261.00 252.6 1991 6,757.00 259 1992 6,977.00 266.1 1993 7,251.00 272.2 1994 7,330.00 277 1995 7,225.00 273.4 1996 7,495.00 273.4 1997 7,830.00 277.2 1998 7,889.00 279.1 1999 7,975.00 284.4 2000 8,240.00 287.1 2001 8,640.00 294.828116
47 The increase in world oil demand during the past five years has strongly affected the market for oil transportation. According to the International Energy Agency, or IEA, between 1996 and 2000, world oil consumption increased at a compounded annual growth rate of 1.3%. The IEA reported a 0.9% increase in world oil consumption in 2000 and forecasts that world oil consumption will grow by 1.7% in 2001. The following table indicates the geographic breakdown of world oil demand during the past five years and as forecasted for 2001. WORLD OIL DEMAND (millions of barrels per day)
FIVE YEAR ESTIMATED COMPOUNDED PERCENT ANNUAL CHANGE 1996 1997 1998 1999 2000 GROWTH RATE 2001E 2000-2001 -------- -------- -------- -------- -------- ------------ -------- --------- OECD* Demand North America 22.2 22.7 23.1 23.9 24.0 2.0% 24.4 1.7% Europe 14.9 15.0 15.3 15.1 15.0 0.2% 15.2 1.3% Pacific 8.8 9.0 8.4 8.6 8.6 (0.6)% 8.7 1.2% ---- ---- ---- ---- ---- ---- ---- --- Total OECD 45.9 46.7 46.8 47.6 47.6 0.9% 48.2 1.3% Total Non-OECD 25.9 26.5 26.7 27.2 27.8 2.0% 28.5 2.5% ---- ---- ---- ---- ---- ---- ---- --- Total World Demand 71.8 73.1 73.5 74.8 75.4 1.3% 76.7 1.7% ==== ==== ==== ==== ==== ==== ==== ===
- ------------------------ Source: International Energy Agency -- Monthly Oil Market Report -- April 2001; Annual Statistical Supplement for 1998. * Organisation for Economic Co-Operation and Development. The Energy Information Administration projected that oil production in Central and South America (including Mexico), the primary sources of oil to the Atlantic basin market, will increase by approximately 28% between 1998 and 2010. The following table indicates the geographic breakdown of world oil supply (i.e., production) during the past five years and as forecasted in 2001. WORLD OIL SUPPLY (millions of barrels per day)
FIVE YEAR ESTIMATED COMPOUNDED PERCENT ANNUAL CHANGE 1996 1997 1998 1999 2000 GROWTH RATE 2001E 2000-2001 -------- -------- -------- -------- -------- ------------ -------- --------- OECD* Supply North America 14.3 14.6 14.5 14.0 14.3 0.0% 14.5 1.4% Europe 6.7 6.7 6.7 6.8 6.8 0.4% 6.6 (2.9)% Pacific 0.7 0.7 0.7 0.7 0.8 3.4% 0.8 (0.0)% ---- ---- ---- ---- ---- ---- ---- ----- Total OECD 21.7 22.1 21.9 21.4 21.9 0.2% 22.0 0.5% Non-OECD 21.9 22.5 22.8 23.3 23.9 2.2% 24.5 2.5% Total OPEC 28.4 29.9 30.8 29.4 30.8 2.0% 30.9 (1) 0.3% ---- ---- ---- ---- ---- ---- ---- ----- Total World Supply 72.0 74.4 75.5 74.1 76.7 1.6% 77.4 0.9% ==== ==== ==== ==== ==== ==== ==== =====
Source: International Energy Agency -- Monthly Oil Market Report -- April 2001; Annual Statistical Supplement for 1998. (*) Organisation for Economic Co-Operation and Development. (1) 2001 estimates taken from the Energy Information Administration -- Short-Term Energy Outlook April 2001. TANKER SUPPLY The supply of tankers increases with deliveries of newbuildings and decreases with scrapping of older vessels, loss of tonnage as a result of casualties and conversion of vessels to other uses, such as floating production and storage facilities. According to Clarkson Research Studies, during the past five years, the size of the world Aframax fleet increased from approximately 43 million dwt to approximately 51 million dwt, and the Aframax orderbook as of March 31, 2001, measured in dwt, represented approximately 17.7% of the total world Aframax fleet. According to Clarkson Research Studies, the size of the world Suezmax fleet has remained relatively stable during the past five years ranging from approximately 39 to 41 million dwt, and the Suezmax orderbook as of March 31, 2001, measured in dwt, represented approximately 25.1% of the total world Suezmax fleet. Historical development of the Aframax and Suezmax fleets is detailed below. 48 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AFRAMAX FLEET DEVELOPMENT 1970-2000
YEAR DELIVERIES (1) (IN MILIONS OF DWT) SCRAPPINGS (1) (IN MILLIONS OF DWT) FLEET SIZE (2) IN MILLIONS OF DWT) 1970 1.4 0.0 22.1 1971 0.6 0.0 23.5 1972 1.0 0.0 24.0 1973 0.9 0.0 24.8 1974 3.0 0.0 25.5 1975 4.2 (0.7) 28.5 1976 3.4 (1.0) 31.9 1977 1.3 (0.9) 34.3 1978 0.8 (3.2) 34.3 1979 1.2 (0.5) 31.9 1980 2.3 (0.6) 32.7 1981 2.4 (0.7) 34.3 1982 0.5 (2.1) 35.9 1983 0.7 (2.0) 33.9 1984 0.5 (1.7) 32.6 1985 1.5 (1.8) 31.2 1986 2.1 (0.7) 30.8 1987 1.8 (1.3) 32.0 1988 1.6 (0.2) 32.4 1989 1.9 (0.1) 33.9 1990 2.6 (0.3) 35.7 1991 2.4 (0.7) 38.1 1992 3.0 (1.9) 39.7 1993 2.5 (1.7) 40.7 1994 2.0 (1.1) 41.5 1995 1.3 (0.7) 42.2 1996 1.6 (0.5) 42.7 1997 2.0 (0.8) 43.5 1998 3.5 (0.3) 44.3 1999 5.0 (2.7) 47.2 2000 2.2 (1.6) 49.6
Source: Clarkson Research Studies. (1) Deliveries and Scrappings are annual rates; 2000 data is through September (2) Fleet size is as of beginning of each year. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SUEZMAX FLEET DEVELOPMENT 1970-2000
YEAR DELIVERIES (1) (IN MILIONS OF DWT) SCRAPPINGS (1) (IN MILLIONS OF DWT) FLEET SIZE (2) IN MILLIONS OF DWT) 1970 1.8 0.0 9.5 1971 1.9 0.0 11.2 1972 1.0 0.0 13.1 1973 1.9 0.0 13.9 1974 4.7 0.0 16.0 1975 7.3 0.0 20.9 1976 5.5 (0.1) 28.2 1977 4.4 (0.8) 33.6 1978 2.3 (1.5) 37.2 1979 1.2 (1.0) 37.5 1980 0.6 (1.3) 37.4 1981 0.2 (1.5) 37.0 1982 0.5 (1.2) 35.4 1983 0.5 (0.8) 34.4 1984 0.4 (0.3) 33.8 1985 0.0 (0.9) 34.0 1986 0.1 (0.8) 32.5 1987 0.5 (0.3) 31.6 1988 1.1 (0.5) 32.1 1989 1.4 (0.2) 32.7 1990 1.3 (0.3) 34.0 1991 3.0 (0.9) 34.9 1992 3.9 (0.7) 36.7 1993 1.9 (1.8) 39.9 1994 1.3 (1.2) 40.0 1995 1.2 (1.1) 39.4 1996 1.3 (1.1) 39.1 1997 1.6 (0.3) 38.7 1998 3.1 (1.3) 40.0 1999 2.4 (3.1) 41.0 2000 3.3 (2.5) 40.1
Source: Clarkson Research Studies. (1) Deliveries and Scrappings are annual rates; 2000 data is through September (2) Fleet size is as of beginning of each year. 49 Typically, newbuildings are delivered 18 to 36 months after they are ordered depending on the available capacity of the shipyard. Deliveries of newbuild Aframax and Suezmax tankers, which were limited during the weak market of the mid-1990s, increased after 1997 due to improved market conditions and in anticipation of the replacement of an aging fleet. We believe that the current orderbook represents a meaningfully smaller percentage of the worldwide Aframax and Suezmax tanker fleets than do the vessels 20 years of age or older. According to Clarkson Research Studies and as shown in the chart below, as of March 31, 2001, the size of the Aframax newbuilding orderbook represented approximately 17.7% of the existing fleet, or approximately 9.0 million dwt. By comparison, according to Clarkson Research Studies, approximately 20.5% of the vessels in the current world Aframax fleet, or 10.5 million dwt, were 20 years of age or older. Similarly, according to Clarkson Research Studies, the size of Suezmax newbuilding orderbook represented approximately 25.1% of the existing fleet, or approximately 10.3 million dwt, whereas approximately 27.5% of the vessels in the current world Suezmax fleet, or 11.3 million dwt, were 20 years of age or older. We believe this data indicates that the delivery of newbuildings may be inadequate to provide for anticipated growth in demand for oil and to replace the elimination of older tonnage as it is scrapped or otherwise removed over the next three years from deployment. [CHART] Source: Clarkson Research Studies. Data is based on dwt. Data is as of March 31, 2001. Vessel owners often conclude that it is more economical to scrap a vessel that has exhausted its useful life than to upgrade the vessel to maintain it "in-class." A vessel is deemed to be "in-class" if the surveyors of a classification society such as Det Norske Veritas, the American Bureau of Shipping or Nippon Kaiji Kyokai determine that the vessel conforms to the standards and rules of that classification society. In many cases, particularly when tankers reach 20 to 25 years of age, the costs of conducting the special survey and performing associated repairs, such as the replacement of steel plate, in order to maintain a vessel "in-class" may not be warranted. Customers, insurance companies and other industry participants use the survey and classification regime to obtain reasonable assurance of a vessel's seaworthiness, and vessels must be certified as "in-class" in order to continue to trade. In addition, regulations set by the International Maritime Organization, a United Nations' agency, impose significant restrictions on vessels trading beyond 25 years of age. 50 We believe that scrapping of most of the vessels delivered in the mid-1970s, as they near the end of their useful lives, in conjunction with customers' preference for younger vessels, will change the tanker business during the next several years. Factors affecting the amount of tonnage scrapped include market conditions and second-hand vessel values in relation to scrap prices. Scrapping rates reached a 14-year high in 1999, reflecting the number of vessels 20 years of age or older and the relatively low charter rates. According to Clarkson Research Studies, approximately 2.7 million dwt of Aframax tankers and 3.1 million dwt of Suezmax tankers were scrapped during 1999 at an average age of approximately 24 years. This rate of scrapping slowed during 2000 as tanker rates improved. During the year 2000, approximately 1.6 million dwt of Aframax tankers and 2.5 million dwt of Suezmax tankers were scrapped. 51 BUSINESS OVERVIEW We are a leading provider of international seaborne crude oil transportation services within the Atlantic basin. In connection with this offering, our newly formed company is creating a 29-vessel fleet by bringing together the following 24 Aframax and five Suezmax tankers: - Fourteen (14) vessels which were owned and commercially managed by our predecessor entities and which we are assembling at the time of this offering that together constitute our existing fleet described in our historical financial statements; - Five (5) vessels owned by affiliates of Wexford Capital LLC and commercially managed by our predecessor entities that we have agreements to acquire at the closing of this offering; and - Ten (10) vessels that we have agreements to acquire subsequent to this offering. Our existing fleet of 14 vessels generated approximately $41.0 million in net voyage revenues, $32.8 million in EBITDA and $21.8 million in net income during the three months ended March 31, 2001 and generated approximately $108.0 million in net voyage revenues, $74.1 million in EBITDA and $30.3 million in net income for the year ended December 31, 2000. Upon completion of the transactions outlined above and described in more detail below, we will have, based on current world fleet statistics, the fourth largest mid-sized tanker fleet in the world based on our total cargo carrying capacity of approximately 3.0 million deadweight tons. With 17 of these 29 vessels currently operating in the Atlantic basin, we have one of the largest fleets in this region, which includes ports in the Caribbean, South and Central America, the United States, Western Africa and the North Sea. We intend to deploy the remaining vessels in regions that we believe will maximize our financial performance. As of March 31, 2001, based on dwt, the average age of our nine Aframax tankers which currently operate in the Atlantic basin is approximately 10.3 years, compared to an average age for the world Aframax tanker fleet, according to Clarkson Research Studies, of approximately 11.7 years. On the same basis, the average age of our five Suezmax tankers which operate in the Atlantic basin is 10.0 years, compared to an average age for the world Suezmax tanker fleet, according to Clarkson Research Studies, of 11.8 years. Since we commenced operations in 1997, our voyage revenues have grown from approximately $12.4 million in 1997 to $62.0 million in 1998, $71.5 million in 1999, $132.0 million in 2000. In the three months ended March 31, 2001, our voyage revenues were approximately $48.0 million, compared to approximately $22.8 million for the three months ended March 31, 2000. We acquired six vessels in 1997, four vessels in 1998, one vessel in 1999 and three additional vessels in 2000 and did not acquire any additional vessels in the three months ended March 31, 2001. We have agreements to acquire five vessels in our total 29-vessel fleet at the closing of this offering and have agreements to acquire the remaining 10 vessels following the closing of this offering. These 15 vessels and their results of operations are not reflected in the financial statements and historical financial and statistical information in the prospectus, unless otherwise indicated. OUR COMPETITIVE STRENGTHS We pursue an intensively customer- and service-focused strategy to achieve superior operating results. Our strategy is based on the following key competitive strengths: - HIGH-QUALITY VESSELS. We operate a fleet of high-quality, mid-sized tankers which we believe allows us to operate with relatively low maintenance and operating costs. As of March 31, 2001, two of our Aframax tankers and none of our Suezmax tankers operating in the Atlantic basin were older than 15 years of age, compared to 30.6% of the world fleet of Aframax tankers and 31.2% of the world fleet of Suezmax tankers which were older than 15 years of age as of that date. Because of increasingly stringent operating and safety standards, the age and quality of our fleet have given us a high level of acceptance by charterers. 52 - FOCUSED FLEET OF MID-SIZED TANKERS. A number of our vessels have one or two substantially identical "sister ships" in our fleet which often can be used interchangeably, giving us scheduling flexibility and greater economies of scale. By focusing on the Atlantic basin, and particularly the Caribbean, we have become a leading provider of mid-sized tankers in this region. We believe that the high concentration of load and discharge ports in this region enables us to deploy our vessels on additional revenue generating voyages during times when they would otherwise have no cargo. - CUSTOMER RELATIONSHIPS. We are building relationships with a number of our customers, including Chevron Corporation, CITGO Petroleum Corp., Exxon Mobil Corporation, Phillips Petroleum Corporation and Texaco Inc. These customers accounted for approximately 1.4%, 5.5%, 0.0%, 12.9% and 0.0% of our voyage revenues in the three months ended March 31, 2001 and approximately 3.4%, 9.6%, 2.3%, 3.3% and 5.1%, respectively, of our voyage revenues in 2000. We believe that our customer relationships stem from our reputation for dependability and for delivering high quality transportation services. - EXPERIENCED MANAGEMENT TEAM. Our founder, Peter C. Georgiopoulos, has more than 11 years of experience in the tanker industry, including 10 years as a ship owner. Our senior executive officers and key employees have a combined total of more than 90 years of experience in the shipping industry. We have experienced management in all functions critical to our operations, promoting a focused marketing effort, tight quality and cost controls and effective operations and safety monitoring. Our high quality fleet has resulted in an average of 97.8% ship utilization for the period from 1997 through March 31, 2001. While we strive to maintain these strengths, we operate in a highly competitive industry which is subject to downturns in regional and global economies as well as changes in regulations which could adversely affect us and our industry. For a discussion of these and other risks which could adversely affect us and our industry, you should read the section of this prospectus entitled "Risk Factors." BUSINESS STRATEGY Our strategy is to employ our existing competitive strengths to continue to enhance our position and to maximize shareholder value. Our strategic initiatives include: - GROWING THROUGH ACQUISITIONS. We believe that the tanker industry is fragmented, with many opportunities for consolidation. According to Clarkson Research Studies, as of March 31, 2001, the world tanker fleet of approximately 3,430 vessels larger than 10,000 dwt was owned by approximately 565 beneficial owners with the top 10 tanker and combined carrier owners accounting for approximately 26.4% of the fleet as measured by dwt, up from 18.7% in 1997. In addition, during the past decade, many oil companies have reduced the size of their fleets. We intend to continue to expand our Aframax and Suezmax tanker fleets through acquisitions of ship-owning businesses and vessels. We acquired three Suezmax tankers in 2000, are currently acquiring five Aframax tankers and have agreements to acquire 10 additional Aframax tankers following the closing of this offering. - EXPANDING OUR PRESENCE IN THE ATLANTIC BASIN. Vessels operating in the Atlantic basin primarily serve the U.S. oil market, which is governed by strict environmental regulations. We believe that the quality of our fleet and our excellent safety record will facilitate our expansion in this region. - STRENGTHENING OUR RELATIONSHIPS WITH CURRENT CUSTOMERS AND DEVELOPING RELATIONSHIPS WITH NEW CUSTOMERS. Our goal is to be the first choice of the major oil companies for crude oil transportation. Our reputation for quality and service has enabled us to develop relationships with many oil companies. We intend to use our reputation to strengthen relationships with existing customers and establish relationships with new clients. We seek to anticipate our clients' crude oil transportation needs and to respond quickly when we recognize opportunities. 53 - BALANCING OUR FLEET DEPLOYMENT. We actively manage the deployment of our fleet in order to achieve a balance between spot charters and time charters. We seek to preserve significant exposure to market conditions and rates while providing a reliable revenue stream. - MAINTAINING OUR COMMITMENT TO EXCELLENCE AND SAFETY. We are committed to providing high quality service. Our fleet has an excellent safety record. We intend to maintain our high level of quality and safety by focusing our acquisition efforts on newer ships, inspecting our ships frequently and maintaining them in excellent condition. OUR FLEET The following table provides information with respect to our fleet.
YEAR YEAR DEADWEIGHT EMPLOYMENT STATUS YARD BUILT ACQUIRED TYPE TONS (EXPIRATION DATE) ------------ -------- ------------- -------- ----------- --------------------- OUR EXISTING FLEET (1) AFRAMAX TANKERS GENMAR AJAX................ Samsung 1996 1998 DH 96,183 TC (August 2003) GENMAR AGAMEMNON........... Samsung 1995 1998 DH 96,226 Spot GENMAR MINOTAUR............ Samsung 1995 1998 DH 96,226 Spot GENMAR CONSTANTINE......... S. Kurushima 1992 1998 DH 102,335 Spot GENMAR GABRIEL............. S. Kurushima 1990 1999 DS 94,993 Spot GENMAR GEORGE.............. Koyo 1989 1997 DS 94,955 TC (May 2003) GENMAR COMMANDER........... Sumitomo 1989 1997 SH 96,578 TC (February 2002) GENMAR BOSS................ Kawasaki 1985 1997 DS 89,601 Spot GENMAR SUN................. Kawasaki 1985 1997 DS 89,696 TC (February 2002) SUEZMAX TANKERS GENMAR SPARTIATE........... Ishikawajima 1991 2000 SH 155,150 Spot GENMAR ZOE................. Ishikawajima 1991 2000 SH 152,402 Spot GENMAR MACEDON............. Ishikawajima 1990 2000 SH 155,527 Spot GENMAR ALTA (6)............ Mitsubishi 1990 1997 SH 146,251 Spot GENMAR HARRIET (6)......... Kawasaki 1989 1997 SH 146,184 Spot --------- TOTAL 1,612,307 WEXFORD TANKERS (2) to be acquired at the closing of this offering AFRAMAX TANKERS GENMAR ALEXANDRA........... S. Kurushima 1992 DH 102,262 Spot GENMAR HECTOR.............. Hyundai 1992 DH (4) 96,027 Spot GENMAR PERICLES............ Hyundai 1992 DH (4) 96,027 Spot WEST VIRGINIA (5).......... Mitsubishi 1981 SH 89,000 Spot KENTUCKY (5)............... Mitsubishi 1980 SH 89,225 Spot --------- TOTAL 472,541 UNAFFILIATED TANKERS (3) to be acquired after the closing of this offering AFRAMAX TANKERS GENMAR CHAMPION (5)(6)..... Hyundai 1992 DH (4) 96,027 (7) GENMAR SPIRIT (5)(6)....... Hyundai 1992 DH (4) 96,027 (7) GENMAR STAR (5)(6)......... Hyundai 1992 DH (4) 96,027 (7) GENMAR TRUST (5)(6)........ Hyundai 1992 DH (4) 96,027 (7) GENMAR CHALLENGER (5)(6)... Hyundai 1991 DH (4) 96,043 (7) GENMAR ENDURANCE (5)(6).... Hyundai 1991 DH (4) 96,043 (7) GENMAR TRADER (5)(6)....... Hyundai 1991 DH (4) 96,043 (7) GENMAR LEONIDAS (5)(6)..... Imabari 1991 DS 96,043 (7) GENMAR NESTOR (5)(6)....... Koyo 1990 DS 97,002 (7) STAVANGER PRINCE (5)(6)(8)................ Ishikawajima 1979 SH 88,868 TC (January 2002)(9) --------- TOTAL 955,219 TOTAL FLEET 3,040,067 ========= FLAG ---------------- OUR EXISTING FLEET (1) AFRAMAX TANKERS GENMAR AJAX................ Liberia GENMAR AGAMEMNON........... Liberia GENMAR MINOTAUR............ Liberia GENMAR CONSTANTINE......... Liberia GENMAR GABRIEL............. Marshall Islands GENMAR GEORGE.............. Liberia GENMAR COMMANDER........... Liberia GENMAR BOSS................ Marshall Islands GENMAR SUN................. Marshall Islands SUEZMAX TANKERS GENMAR SPARTIATE........... Marshall Islands GENMAR ZOE................. Marshall Islands GENMAR MACEDON............. Marshall Islands GENMAR ALTA (6)............ Liberia GENMAR HARRIET (6)......... Liberia WEXFORD TANKERS (2) to be acquired at the closing of this offering AFRAMAX TANKERS GENMAR ALEXANDRA........... Marshall Islands GENMAR HECTOR.............. Marshall Islands GENMAR PERICLES............ Marshall Islands WEST VIRGINIA (5).......... Malta KENTUCKY (5)............... Malta UNAFFILIATED TANKERS (3) to be acquired after the closing of this offering AFRAMAX TANKERS GENMAR CHAMPION (5)(6)..... Liberia GENMAR SPIRIT (5)(6)....... Liberia GENMAR STAR (5)(6)......... Liberia GENMAR TRUST (5)(6)........ Liberia GENMAR CHALLENGER (5)(6)... Liberia GENMAR ENDURANCE (5)(6).... Liberia GENMAR TRADER (5)(6)....... Liberia GENMAR LEONIDAS (5)(6)..... Panama GENMAR NESTOR (5)(6)....... Panama STAVANGER PRINCE (5)(6)(8)................ NIS (10)
- ------------------------------ DH Double-hull tanker; DS Double-sided tanker; SH Single-hull tanker (1) Vessels owned by our predecessor entities prior to this offering, which we currently commercially manage and which are reflected in the financial statements and the historical financial and statistical contained in this prospectus. (2) Vessels owned by affiliates of Wexford Capital LLC prior to the closing of this offering, which we currently commercially manage. (3) Our acquisition of these vessels is subject to the terms and conditions of the acquisition agreements. See section under the heading "Recapitalization and Acquisitions--Acquisitions." 54 (4) Oil/Bulk/Ore carrier (O/B/O). (5) These vessels currently operate outside of the Atlantic basin. Accordingly, we have not included them in our calculation of the Atlantic basin statistics. (6) The GENMAR ALTA, GENMAR HARRIET, GENMAR CHAMPION, GENMAR SPIRIT, GENMAR STAR, GENMAR TRUST, GENMAR CHALLENGER, GENMAR ENDURANCE, GENMAR TRADER, GENMAR LEONIDAS, GENMAR NESTOR and GENMAR PRINCE are currently named the ALTA, HARRIET, SCF CHAMPION, SCF SPIRIT, SCF STAR, SCF TRUST, SCF CHALLENGER, SCF ENDURANCE, SCF TRADER, ANJA, ANELLA and STAVANGER PRINCE, respectively. We intend to formally change the names of these vessels following our acquisition of them. (7) We expect to acquire these vessels free from charters and, upon our acquisition of them, will deploy them on charters that we deem appropriate. (8) Peter C. Georgiopoulos has an interest in this vessel. See description under the heading "Recapitalization and Acquisitions--Contribution of Vessels." (9) We have an agreement to assume the charter for this vessel upon our acquisition of it. (10) Norwegian International Shipping Registry. The following table compares the ages of our tankers with those of the world tanker fleets. COMPARISON OF FLEET AGE PROFILES (% of Fleet)
0-10 YEARS 11-15 YEARS 16-20 YEARS 21 YEARS & OLDER ---------- ----------- ----------- ---------------- OUR AFRAMAX TANKER FLEET....................... 64% 17% 12% 8% OUR ATLANTIC BASIN AFRAMAX FLEET............... 60% 25% 16% 0% WORLD AFRAMAX TANKER FLEET................... 54% 19% 12% 15% OUR SUEZMAX TANKER FLEET....................... 41% 59% 0% 0% WORLD SUEZMAX TANKER FLEET................... 60% 9% 5% 26% WORLD TANKER FLEET............................. 51% 12% 10% 26%
- ------------------------------ Source: Company Fleet Data and Clarkson Research Studies. Company Fleet Data based on 29 vessels which includes five vessels which we have agreements to acquire at the closing of this offering and 10 vessels we have agreed to acquire following the closing of this offering, subject to the terms and conditions of the related acquisition agreements and is weighted by dwt. Data is as of March 31, 2001; Excludes vessels 10,000 dwt or less. Numbers may not equal 100% due to rounding. 55 FLEET DEPLOYMENT We strive to optimize the financial performance of our fleet by deploying our vessels on time charters and in the spot market. We believe that our fleet deployment strategy provides us with the ability to benefit from increases in tanker rates while at the same time maintaining a measure of stability through cycles in the industry. The following table details the percentage of our fleet operating on time charters and in the spot market during the past three years. TIME CHARTER VS. SPOT MIX (in % of operating days)
THREE MONTHS ELEVEN ENDED YEAR ENDED MONTHS MARCH 31, DECEMBER 31, ENDED ---------------------- ------------------------------------ DECEMBER 31, 2001 2000 2000 1999 1998 1997 -------- -------- -------- -------- -------- ------------ Percent in Time Charter Days........ 40.6% 49.4% 48.6% 48.2% 60.1%(2) 94.5% (1) Percent in Spot Days................ 59.4% 50.6% 51.4% 51.8% 39.9% 5.5% Total Vessel Operating Days......... 1,245 1,001 4,474 3,603 3,030(2) 620(1)
- ------------------------ (1) Including 62 days of bareboat charters. (2) Including 143 days of bareboat charters. Vessels operating on time charters may be chartered for several months or years whereas vessels operating in the spot market typically are chartered for up to several weeks. Vessels operating in the spot market may generate increased profit margins during improvements in tanker rates, while vessels operating on time charters generally provide more predictable cash flows. Accordingly, we actively monitor macroeconomic trends and governmental rules and regulations that may affect tanker rates in an attempt to optimize the deployment of our fleet. As of March 31, 2001, we had four vessels on time charters which expire on dates between February 2002 and August 2003. In 2000, we terminated three of our time charters. For a discussion regarding the termination of these time charters, see "Management's Discussion and Analysis of Financial Condition and Results of Operations." We took redelivery of one of the vessels on these time charters in January 2001 and the second in March 2001. We rechartered the third vessel in January 2001. Three of the ships that we purchased in 2000--the GENMAR MACEDON, the GENMAR SPARTIATE and the GENMAR ZOE--were purchased from Chevron Corporation. At the time of the purchase, we granted Chevron Corporation an option to hire two of those vessels on time charters at the prevailing market rate. This option may be exercised up to two years from the date the ships were delivered to us. The minimum term for the charters pursuant to this is option is one year, and the charters may not extend beyond three years from the date the ships were delivered to us, unless we grant permission for a longer term. This option provides that we may elect to sell, charter or otherwise commit one of these three vessels to a third party only if Chevron Corporation has not already elected to hire the vessel or has not elected to match our offer to sell, charter or otherwise commit the vessel under the terms offered to the third party. As of the date of this prospectus, Chevron Corporation has not exercised this option. CLASSIFICATION AND INSPECTION All of our vessels have been certified as being "in-class" by Det Norske Veritas, the American Bureau of Shipping or Nippon Kaiji Kyokai. Each of these classification societies is a member of the International Association of Classification Societies. Every commercial vessel's hull and machinery is evaluated by a classification society authorized by its country of registry. The classification society certifies that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel's country of registry and the international conventions of which that country is a member. Each vessel is inspected by a surveyor of 56 the classification society in three surveys of varying frequency and thoroughness: every year for the annual survey, every two to three years for the intermediate survey and every four to five years for special surveys. Vessels may be required, as part of the intermediate survey process, to be drydocked every 24 to 30 months for inspection of the underwater portions of the vessel and for necessary repair stemming from the inspection. Special surveys always require drydocking. In addition to the classification inspections, many of our customers regularly inspect our vessels as a precondition to chartering them for voyages. We believe that our well-maintained, high-quality vessels provide us with a competitive advantage in the current environment of increasing regulation and customer emphasis on quality. We have implemented the International Safety Management Code which was promulgated by the International Maritime Organization a United Nations' agency, to establish pollution prevention requirements applicable to tankers. Prior to July 1, 1998, we obtained documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the International Maritime Organization. OPERATIONS AND SHIP MANAGEMENT We employ experienced management in all functions critical to our operations, aiming to provide a focused marketing effort, tight quality and cost controls and effective operations and safety monitoring. We currently provide the technical management necessary for the operations of most of our fleet. These operations include ship maintenance, officer staffing, technical support, shipyard supervision, insurance and financial management services. Our crews inspect our vessels and perform ordinary course maintenance, both at sea and in port. We regularly inspect our vessels using rigorous criteria. We examine each vessel and make specific notations and recommendations for improvements to the overall condition of the vessel, maintenance of the vessel and safety and welfare of the crew. We have a chartering staff located in New York, NY which actively monitors fleet operations, vessel positions and spot-market charter rates worldwide. We believe that monitoring this information is critical to making informed bids on competitive brokered charters. CREWING AND EMPLOYEES We currently employ approximately 30 office personnel. Approximately 15 of these employees are located in New York, NY and manage the commercial operations of our business. The other 15 employees are located in Piraeus, Greece and manage the technical operations of our business. Our 15 employees located in Greece are also subject to Greece's national employment collective bargaining agreement which covers terms and conditions of their employment. We currently employ approximately 50 seaborne personnel to crew our existing fleet of 14 vessels consisting of captains, chief engineers, chief officers and first engineers. The balance of each crew is staffed by employees of a third party to whom we contract for crew management services. We believe that we could obtain a replacement provider for these services, or could provide these services internally, without any adverse impact on our operations. We anticipate adding approximately 30 seaborne personnel to crew some of the vessels we are acquiring in connection this offering. We place great emphasis on attracting qualified crew members for employment on our tankers. Recruiting qualified senior officers has become an increasingly difficult task for tanker operators. We pay competitive salaries and provide competitive benefits to our personnel. We believe that the well-maintained quarters and equipment on our vessels help to attract and retain motivated and qualified seamen and officers. Our crew management services contractors have collective bargaining agreements which cover all the junior officers and seamen whom they provide to us. 57 CUSTOMERS Our customers include oil companies, oil traders, tanker owners and others. During the three months ended March 31, 2001, Skaugen PetroTrans, Inc., Sun International Ltd. and Phillips Petroleum Company accounted for 14.8%, 13.2% and 12.9%, respectively, of our voyage revenues. During 2000, the Coastal Corporation, an international oil company recently acquired by El Paso Energy Corporation, and OMI Corporation, another tanker owner, accounted for approximately 14.7% and 11.3%, respectively, of our voyage revenues. Revenues from OMI Corporation primarily resulted from time charter arrangements for the GENMAR ALTA and the GENMAR HARRIET; we terminated our time charters for these two vessels, effective fourth quarter of 2000. COMPETITION International seaborne transportation of crude oil and other petroleum products is provided by two main types of operators: fleets owned by independent companies and fleets of oil companies (both private and state-owned). Many oil companies and other oil trading companies, the primary charterers of the vessels we own, also operate their own vessels and transport oil for themselves and third party charterers in direct competition with independent owners and operators. Competition for charters is intense and is based upon price, vessel location, the size, age, condition and acceptability of the vessel, and the quality and reputation of the vessel's operator. We compete principally with other Aframax and Suezmax owners. However, competition in the Aframax and Suezmax markets is also affected by the availability of alternative size vessels. Panamax size vessels and oil/bulk/ore carriers (which carry oil or dry bulk cargo) can compete for many of the same charters for which we compete. Because Ultra Large Crude Carriers and Very Large Crude Carriers cannot enter the ports we serve due to their large size, they rarely compete directly with our tankers for specific charters. Other significant operators of multiple Aframax and Suezmax vessels in the Atlantic basin include American Eagle Tankers, Inc. Limited, OMI Corporation, Overseas Shipholding Group, Inc. and Teekay Shipping Corporation. There are also numerous, smaller tanker operators in the Atlantic basin. We believe that we have significant competitive advantages in the Aframax and Suezmax tanker markets as a result of the age, quality, type and size of our vessels and our market share in the Atlantic basin. INSURANCE The operation of any ocean-going vessel carries an inherent risk of catastrophic marine disasters and property losses caused by adverse weather conditions, mechanical failures, human error, war, terrorism and other circumstances or events. In addition, the transportation of crude oil is subject to the risk of spills, and business interruptions due to political circumstances in foreign countries, hostilities, labor strikes and boycotts. The U.S. Oil Pollution Act of 1990 has made liability insurance more expensive for ship owners and operators imposing potentially unlimited liability upon owners, operators and bareboat charterers for certain oil pollution accidents in the United States. We believe that our current insurance coverage is adequate to protect us against the principal accident-related risks which we face in the conduct of our business. Our protection and indemnity insurance covers third-party liabilities and other related expenses from, among other things, injury or death of crew, passengers and other third parties, claims arising from collisions, damage to cargo and other third-party property and pollution arising from oil or other substances. Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident and is provided by mutual protection and indemnity associations. Each of the vessels currently in our fleet is entered in a protection and indemnity association which is a member of the International Group of Protection and Indemnity Mutual Assurance Associations. The 14 protection and indemnity associations that comprise the International Group insure approximately 90% of the 58 world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. Each protection and indemnity association has capped its exposure to this pooling agreement at $4.25 billion. As a member of protection and indemnity associations, which are in turn members of the International Group, we are subject to calls payable to the associations based on its claim records as well as the claim records of all other members of the individual associations and members of the pool of protection and indemnity associations comprising the International Group. Our hull and machinery insurance covers risks of actual or constructive loss from collision, fire, grounding and engine breakdown. Our war risk insurance covers risks of confiscation, seizure, capture, vandalism, sabotage and other war-related risks. Our loss of hire insurance covers loss of revenue for up to 90 or 120 days resulting from vessel off-hire for all but two of our vessels. LEGAL PROCEEDINGS We are not aware of any legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our company, our financial condition or our results of operations. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. On March 14, 2001, the GENMAR HECTOR, which we have an agreement to acquire at the closing of this offering, experienced a discharge of approximately 50 to 100 barrels of oil while unloading at the BP Amoco Co. terminal in Texas City, Texas. The protection and indemnity association for this vessel, which provides insurance coverage for such incidents, issued a letter to BP Amoco Co. guaranteeing the payment of any damages for which this vessel may be found liable. Since it appeared that the discharge may have been the fault of the terminal, or that the fault may be shared, BP Amoco Co.'s protection and indemnity association issued a similar letter to the owner of the GENMAR HECTOR. Since that time, additional claims have been asserted by third parties for damage resulting from the spill, but these claims are well within insurance limits and we do not expect any additional claims to approach those limits. Accordingly, we believe that this incident will have no material affect on the value of the GENMAR HECTOR or on our results of operations following the acquisition of this vessel. ENVIRONMENTAL AND OTHER REGULATION Government regulation significantly affects the ownership and operation of our vessels. They are subject to international conventions, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered. We cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. Various governmental and quasi-governmental agencies require us to obtain permits, licenses and certificates for the operation of our vessels. Although we believe that we are substantially in compliance with applicable environmental and regulatory laws and have all permits, licenses and certificates necessary for the conduct of our operations, future non-compliance or failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of our vessels. We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our crews and officers and compliance with U.S. and international regulations. Our vessels are subject to both scheduled and unscheduled inspections by a variety of governmental and private entities, each of which may have unique requirements. These entities include the local port authorities (U.S. Coast Guard, harbor master or equivalent), classification societies, flag 59 state administration (country of registry) and charterers, particularly terminal operators and oil companies. INTERNATIONAL MARITIME ORGANIZATION The International Maritime Organization, the United Nations' agency for maritime safety, has adopted regulations which set forth pollution prevention requirements applicable to tankers. These regulations, which have been implemented in many jurisdictions in which our vessels operate, provide, in part, that: - 25-year old tankers must be of double-hull construction or of a mid-deck design with double-sided construction, unless: - they have wing tanks or double-bottom spaces not used for the carriage of oil which cover at least 30% of the length of the cargo tank section of the hull or bottom, or - they are capable of hydrostatically balanced loading (loading less cargo into a vessel so that in the event of a breach of the hull, water flows into the vessel, displacing oil upwards instead of into the sea); - 30-year-old tankers must be of double-hull construction or mid-deck design with double-sided construction; and - all tankers will be subject to enhanced inspections. Also, under International Maritime Organization regulations, a tanker must be of double-hull construction or a mid-deck design with double-sided construction or be of another approved design ensuring the same level of protection against oil pollution if the tanker: - is the subject of a contract for a major conversion or original construction on or after July 6, 1993; - commences a major conversion or has its keel laid on or after January 6, 1994; or - completes a major conversion or is a newbuilding delivered on or after July 6, 1996. Upon the closing of this offering and our acquisition of 10 vessels which we have agreements to acquire following the closing of this offering, we will own nine single-hull vessels. Under the current regulations, these vessels will be able to operate for various periods for up to eight years before being required to be scrapped or retrofitted to conform to international environmental standards. Although five of these vessels are 15 years of age or older, the oldest is only 21 years old and, therefore, the International Maritime Organization requirements currently in effect regarding 25- and 30-year old tankers will not affect our fleet in the near future. Compliance with the new regulations regarding inspections of all vessels, however, could adversely affect our operations. The International Maritime Organization has approved an accelerated time-table for the phase-out of single-hull oil tankers. The new regulations, expected to take effect in September 2002, require the phase-out of most single-hull oil tankers by 2015 or earlier, depending on the age of the tanker and whether it has segregated ballast tanks. Under the new regulations, the maximum permissible age for single-hull tankers after 2007 will be 26 years, as opposed to 30 years under current regulations. Of the nine single-hull vessels which we are acquiring at the time of this offering or have agreements to acquire at or after the closing of this offering, one will be phased-out by 2006 and two will be phased-out by 2007 under the new regulations. The remaining six single-hull tankers would be phased out by 2015 unless retrofitted with a second hull. The requirements contained in the International Safety Management Code, or ISM Code, promulgated by the International Maritime Organization, also affect our operations. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management 60 system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We intend to rely upon the safety management system that we and our third party technical managers have developed. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel's management with code requirements for a safety management system. No vessel can obtain a certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the International Maritime Organization. We are required to renew these documents of compliance and safety management certificates annually. Noncompliance with the ISM Code and other International Maritime Organization regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The U.S. Coast Guard and European Union authorities have indicated that vessels not in compliance with the ISM Code by the applicable deadlines will be prohibited from trading in U.S. and European Union ports, as the case may be. The International Maritime Organization has negotiated international conventions that impose liability for oil pollution in international waters and a signatory's territorial waters. Additional or new conventions, laws and regulations may be adopted which could limit our ability to do business and which could have a material adverse effect on our business and results of operations. U.S. OIL POLLUTION ACT OF 1990 AND COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT The U.S. Oil Pollution Act of 1990, or OPA 90, established an extensive regulatory and liability regime for environmental protection and cleanup of oil spills. The U.S. Oil Pollution Act of 1990 affects all owners and operators whose vessels trade with the United States or its territories or possessions, or whose vessels operate in the waters of the United States, which include the U.S. territorial sea and the 200 nautical mile exclusive economic zone around the United States. The Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, applies to the discharge of hazardous substances whether on land or at sea. Both The U.S. Oil Pollution Act of 1990 and CERCLA impact our operations. Under The U.S. Oil Pollution Act of 1990, vessel owners, operators and bareboat charterers are "responsible parties" who are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from oil spills from their vessels. These other damages are defined broadly to include: - natural resource damages and related assessment costs, - real and personal property damages, - net loss of taxes, royalties, rents, profits or earnings capacity, - net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and - loss of subsistence use of natural resources. The U.S. Oil Pollution Act of 1990 limits the liability of responsible parties to the greater of $1,200 per gross ton or $10 million per tanker that is over 3,000 gross tons (subject to possible adjustment for inflation). The act specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation 61 providing for unlimited liability for discharge of pollutants within their waters. In some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining tanker owners' responsibilities under these laws. CERCLA, which applies to owners and operators of vessels, contains a similar liability regime and provides for cleanup, removal and natural resource damages. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million. These limits of liability do not apply, however, where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party's gross negligence or willful misconduct. These limits do not apply if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. The U.S. Oil Pollution Act of 1990 and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. We believe that we are in substantial compliance with OPA 90, CERCLA and all applicable state regulations in the ports where our vessels call. The U.S. Oil Pollution Act of 1990 requires owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the limit of their potential strict liability under the act. The U.S. Coast Guard has enacted regulations requiring evidence of financial responsibility in the amount of $1,500 per gross ton for tankers, coupling the The U.S. Oil Pollution Act of 1990 limitation on liability of $1,200 per gross ton with the CERCLA liability limit of $300 per gross ton. Under the regulations, evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance or guaranty. Under The U.S. Oil Pollution Act of 1990 regulations, an owner or operator of more than one tanker is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the tanker having the greatest maximum strict liability under The U.S. Oil Pollution Act of 1990 and CERCLA. We have provided requisite guarantees and received certificates of financial responsibility from the U.S. Coast Guard for each of our vessels required to have one. We insure each of our vessels with pollution liability insurance in the maximum commercially available amount of $1 billion. A catastrophic spill could exceed the insurance coverage available, in which event there could be a material adverse effect on our business. Under The U.S. Oil Pollution Act of 1990, with certain limited exceptions, all newly-built or converted tankers operating in U.S. waters must be built with double-hulls, and existing vessels that do not comply with the double-hull requirement must be phased out over a 20-year period (1995-2015) based on size, age and place of discharge, unless retrofitted with double-hulls. Notwithstanding the phase-out period, the act currently permits existing single-hull tankers to operate until the year 2015 if their operations within U.S. waters are limited to discharging at the Louisiana Offshore Oil Port or off-loading by lightering within authorized lightering zones more than 60 miles off-shore. Lightering is the process by which vessels at sea off-load their cargo to smaller vessels for ultimate delivery to the discharge port. Owners or operators of tankers operating in the waters of the United States must file vessel response plans with the U.S. Coast Guard, and their tankers are required to operate in compliance with their U.S. Coast Guard approved plans. These response plans must, among other things: - address a "worst case" scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a "worst case discharge"; - describe crew training and drills; and - identify a qualified individual with full authority to implement removal actions. We have obtained vessel response plans approved by the U.S. Coast Guard for our vessels operating in the waters of the United States In addition, the U.S. Coast Guard has announced it intends to propose similar regulations requiring certain tanker vessels to prepare response plans for the release of hazardous substances. 62 OTHER REGULATION Although the United States is not a party to these conventions, many countries have ratified and follow the liability plan adopted by the International Maritime Organization and set out in the International Convention on Civil Liability for Oil Pollution Damage, 1969 and the Convention for the Establishment of an International Fund for Oil Pollution of 1971. Under these conventions, a vessel's registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain complete defenses. Liability is limited to approximately $183 per gross registered ton (a unit of measurement of the total enclosed spaces within a vessel) or approximately $19.3 million, whichever is less, or approximately $76.9 million, as calculated based on conversion of 59.7 million special drawing rights as of February 27, 2001, depending on whether the country in which the damage results is a party to the 1992 Protocol to the International Convention on Civil Liability for Oil Pollution Damage, which raised the maximum limit to approximately $82.7 million. The limit of liability is tied to a unit of account which varies according to a basket of currencies. The right to limit liability is forfeited under the International Convention on Civil Liability for Oil Pollution Damage where the spill is caused by the owner's actual fault and under the 1992 Protocol where the spill is caused by the owner's intentional or reckless conduct. Vessels trading to states which are parties to these conventions must provide evidence of insurance covering the liability of the owner. In jurisdictions where the International Convention on Civil Liability for Oil Pollution Damage has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to that convention. We believe that our insurance policy covers the liability under the plan adopted by the International Maritime Organization. The European Union is considering legislation that will affect the operation of tankers and the liability of owners for oil pollution. The current proposals provide for legislation similar to that of the U.S. Oil Pollution Act of 1990, including the phase-out of the use of single-hull tankers. Italy has announced a ban of single-hull crude oil tankers over 5,000 dwt from most Italian ports, effective April 2001. This ban will be placed on oil product carriers, effective December 1, 2001. It is impossible to predict what legislation or additional regulations, if any, may be promulgated by the European Union or any other country or authority. In addition, most U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law. 63 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information regarding our executive officers and directors as of May 25, 2001:
NAME AGE POSITION - ---- -------- ------------------------------------------------ Peter C. Georgiopoulos............... 40 Chairman, Chief Executive Officer and Director John P. Tavlarios.................... 39 President, Chief Operating Officer and Director James C. Christodoulou............... 41 Vice President, Chief Financial Officer and Secretary John C. Georgiopoulos................ 37 Vice President, Chief Administrative Officer and Treasurer Sir Peter G. Cazalet................. 72 Director William J. Crabtree.................. 57 Director Rex W. Harrington.................... 67 Director Stephen Kaplan....................... 42 Director Peter S. Shaerf...................... 46 Director
- ------------------------ (1) Member of the compensation committee. (2) Member of the audit committee. PETER C. GEORGIOPOULOS is our founder and has served as Chairman, Chief Executive Officer and director since our inception in 1997. From 1991 to 1997, Peter C. Georgiopoulos was the principal of Maritime Equity Management, a ship-owning and investment company which he founded in 1991. From 1990 to 1991, Peter C. Georgiopoulos was affiliated with Mallory Jones Lynch & Associates, an oil tanker brokerage firm. From 1987 to 1990, Peter C. Georgiopoulos was an investment banker at Drexel Burnham Lambert. Prior to entering the investment banking business, Peter C. Georgiopoulos had extensive experience in the sale, purchase and chartering of vessels while working for shipowners in New York and Piraeus, Greece. Peter C. Georgiopoulos is a member of the American Bureau of Shipping. JOHN P. TAVLARIOS has served as our President, Chief Operating Officer and director since May 2001. From our inception in 1997 to January 2000, Mr. Tavlarios served as our Executive Vice President. From 1995 to 1997, Mr. Tavlarios was affiliated with Maritime Equity Management, where he served as Director of Marine Operations. From 1992 to 1995 Mr. Tavlarios was President and founder of Halcyon Trading Company, a consulting firm specializing in international business development with a particular emphasis on the international oil industry. From 1984 to 1992, Mr. Tavlarios was employed by Mobil Oil Corporation, spending most of his tenure in the Marine Operations and the Marketing and Refining divisions. Prior to 1984, Mr. Tavlarios was involved in his family's shipping business, assisting in marine operations. Mr. Tavlarios is a member of the American Bureau of Shipping, the Det Norske Veritas North American Committee, the SKULD Directors Committee and the North American Panel of INTERTANKO. JAMES C. CHRISTODOULOU has served as our Vice President, Chief Financial Officer and Secretary since July 2000. Mr. Christodoulou joined us in August 1999 as a financial consultant while also serving as managing director of NetWorks Capital, a New York based venture capital firm and Chief Financial Officer of ThinkDirectMarketing, Inc. Prior to joining us, Mr. Christodoulou was Chief Financial Officer of World CallNet, Inc., a U.S. public company with operations in the United Kingdom and throughout Europe, from 1998 to 1999. Mr. Christodoulou has been involved in corporate finance since 1993 as Vice President of Corporate Finance at Alpha Capital. Prior to that, he was a senior associate 64 at Easton Capital. From 1985 to 1993, Mr. Christodoulou was a managing partner of Creative Color Lithographers, a printing and publishing company in the New York area. JOHN C. GEORGIOPOULOS has served as our Vice President, Chief Administrative Officer and Treasurer since July 2000. From our inception in 1997 to July 2000, Mr. Georgiopoulos served as our Chief Financial Officer. From 1994 to 1997, Mr. Georgiopoulos was involved in his family's private real estate and investment management business. From 1991 to 1994, Mr. Georgiopoulos was an officer of Atlantic Bank of New York. From 1987 to 1991, he was a Vice President of Atlas Management, a shipping and real estate company in New York. SIR PETER G. CAZALET has served as a director of our company since May 2001. Sir Peter Cazalet is Chairman of Seascope Shipping Holdings plc, an oil tanker brokerage firm, and served as a Chairman of APV plc, a manufacturer of food processing machinery, and as Deputy Chairman of GKN plc, an engineering and defense company, from 1989 to 1996. He also served as a non-executive director of the Peninsular & Oriental Steam Navigation Company, a shipping, real estate and construction company, from 1980 to 1999, a non-executive director of De La Rue plc from 1983 to 1995 and a member of the General Committee of the Lloyd's Register of Shipping from 1981 to 1999. Prior to retiring in 1989, Sir Peter Cazalet served as Deputy Chairman of the British Petroleum Company plc from 1986 to 1989 and as its Managing Director from 1981 to 1986. He served as President of BP North America from 1972 to 1975 and as a director of BP Trading from 1975 to 1981. Sir Peter Cazalet was the Regional Coordinator, Australasia and the Far East from 1970 to 1972 and a director of BP Tanker Company from 1968 to 1970, after having joined BP Tanker Company in 1959. Sir Peter Cazalet began his business career in 1950 in the dry-cargo section of a shipping company and for several years was a shipbroker on the Baltic Exchange. WILLIAM J. CRABTREE has served as a director of our company since May 2001. Mr. Crabtree currently serves as consultant for Universe Tankships (Delaware) LLC, a company that provides technical management services for oil and dry bulk vessels. From 1972 to 1996, Mr. Crabtree served in capacities from Marine Counsel to Chairman of Universe Tankships (Delaware), Inc., a company owned by the D.K. Ludwig Organization, which was predecessor to Universe Tankships (Delaware) LLC. Mr. Crabtree served as counsel for the Commonwealth Oil Refining Company from 1971 to 1972. From 1968 to 1972, Mr. Crabtree was an associate at the law firm of Kirlin, Campbell and Keating. Mr. Crabtree is a member of the Maritime Law Association of the United States and the American Bureau of Shipping. REX W. HARRINGTON has served as a director of our company since May 2001. Mr. Harrington has served as Marine Finance Consultant Adviser, Shipping of The Royal Bank of Scotland plc since his retirement in 1998. Mr. Harrington served as Director of Shipping of The Royal Bank of Scotland plc from 1990 to 1998, Assistant General Manger of Shipping from 1980 to 1990 and Senior Manager of Shipping from 1973 to 1980. From 1969 to 1973 Mr. Harrington served as executive of Baring Brothers & Co. Ltd., an international merchant banking firm, and from 1957 to 1969 served in various capacities ending as the Secretary of the Foreign Exchange Control Committee of the Bank of England. Mr. Harrington currently serves as Deputy Chairman of the International Maritime Industries Forum, a director of Eurofin International Ltd., a director of Royal Olympic Cruise Line, a director of the International Chamber of Commerce, Comerical Cirem Services, which incorporates the International Maritime Bureau, and a member of the General Committee of Lloyd's Register of Shipping, London Advisory Panel of Intercargo, the Baltic Exchange and the Steering Committee of the London Shipping Law Centre. STEPHEN A. KAPLAN has served as a director of our company since May 2001. Since 1995, Mr Kaplan has been a principal of Oaktree Capital Management, LLC, a private investment management firm, where he co-manages Oaktree's Principal Activities Group which invests in majority and significant minority positions in both private and public companies. Since 1993, he has served as portfolio manager 65 of OCM Principal Opportunities Fund, L.P. and OCM Principal Opportunities Fund II, L.P. OCM Principal Opportunities Fund, L.P. will be the owner of more than 5% of our company's common stock. From 1993 to 1995, Mr. Kaplan was a Managing Director of Trust Company of the West. Prior to joining the Trust Company of the West, Mr. Kaplan was a partner of the law firm of Gibson, Dunn & Crutcher. Mr. Kaplan currently serves as a director of numerous private and public companies, including Acorn Products, Inc., a manufacturer and distributor of lawn and garden products, BioPure, Inc., an emerging biopharmaceutical company developing oxygen therapeutics, Forest Oil Corporation, an oil and gas exploration, development and production company and KinderCare Learning Centers, Inc., a leading for-profit child care operator. PETER S. SHAERF has served as a director of our company since May 2001. Mr. Shaerf is a Managing Director of Poseidon Capital Corp., an independent maritime consulting and investment company that works extensively in the investment community, a position he has held since the inception of the company in 1998. Since 1980, he has been a partner of The Commonwealth Group a brokerage and consulting company that specializes in the liner shipping industry. From 1977 to 1980, he was a director of Common Brothers U.S.A. Ltd., a shipbroking subsidiary of a British shipowner of dry cargo and tanker tonnage. Mr. Shaerf currently serves as a director of MC Shipping, Inc. an American Stock Exchange listed company, a position he has held since 1993, and was recently appointed to the board of directors of TBS International Ltd., a liner operator. Peter C. Georgiopoulos and John C. Georgiopoulos are brothers. There are no other family relationships among our executive officers and directors. Our board of directors currently consists of seven members. Our amended and restated articles of incorporation provide for a classified board of directors consisting of three classes of directors, each serving staggered, three-year terms. Except as otherwise provided by our bylaws for filling vacancies on our board of directors, a portion of our board of directors will be elected each year at our annual meeting of shareholders and hold office until their respective successors are elected, or until their earlier resignation or removal. KEY AND OTHER EMPLOYEES JOHN N. MORTSAKIS has served as our Vice President-Technical Operations since April 2000. From 1981 to April 2000, Mr. Mortsakis was the Vice President of National Shipping & Trading Corp., a privately held shipping company, where he began in 1973. From 1970 to 1973, Mr. Mortsakis served in the U.S. Navy on the U.S.S. GEORGE BANCROFT as both Officer of the Deck and Engineering Officer of the Watch. Mr. Mortsakis is a member of the American Bureau of Shipping. Mr. Mortsakis is 54 years old. JOHN M. RAMISTELLA has served as our Vice President-Chartering since our inception in 1997. From 1992 to 1997, Mr. Ramistella was a tanker broker at Poten & Partners, specializing in long term charters and projects. From 1991 to 1992, Mr. Ramistella was President of Norgulf Shipping Ltd., a privately held shipping company. From 1989 to 1991 he was a tanker broker at Mallory Jones Lynch & Associates, an oil tanker brokerage firm. From 1973 to 1989, Mr. Ramistella was President of Tankers Company, Inc., a tanker brokerage firm based in Westport, Connecticut. Mr. Ramistella is 54 years old. LAURENT BOZZONI has served as a special assistant to our Chief Financial Officer in connection with this offering since January 2001. Prior to joining us, Mr. Bozzoni assisted European tanker companies in structuring various projects in the crude oil and oil products industry as a shipping finance consultant. Mr. Bozzoni has worked for ship brokers in Paris, France, and was involved in his family's shipping business in France assisting in finance and operations. 66 BOARD COMMITTEES We will establish a compensation committee and an audit committee. We will not have a nominating committee. The compensation committee will consist of three members, each of whom will be an independent director. The compensation committee will be responsible for establishing executive officers' compensation and fringe benefits. It will also administer our stock option and employee stock purchase plans and will be authorized to grant options under these plans. The audit committee will consist of three members, each of whom will be an independent director. The audit committee will recommend the appointment of independent accountants and review and discuss with the accountants the scope of their examination, their proposed fee and their overall approach to the audit. The audit committee will also review with the accountants and our financial management the annual financial statements and discuss the effectiveness of internal accounting controls. DIRECTOR COMPENSATION Each of our non-employee directors will receive an annual fee of $15,000. For information with respect to option grants to our non-employee directors, see "--Stock Incentive Plan." We will not pay director fees to employee directors. We will reimburse our directors for all reasonable expenses incurred by them in connection with serving on our board of directors. EXECUTIVE COMPENSATION The following tables set forth in summary form information concerning the compensation paid by us during the years ended December 31, 1998, 1999 and 2000, to our Chief Executive Officer and three of our other executive officers whose salaries and bonuses for the year exceeded $100,000 and who served as an executive officer of ours as of December 31, 2000.
ANNUAL COMPENSATION -------------------------------- NAME AND SALARY BONUS PRINCIPAL POSITION YEAR (DOLLARS) (DOLLARS) - ------------------ -------- --------- --------- Peter C. Georgiopoulos............................. 2000 -- 259,600 Chairman, Chief Executive Officer 1999 -- 114,900 and Director 1998 146,100 -- John P. Tavlarios.................................. 2000 120,000 -- President, Chief Operating Officer 1999 120,000 -- and Director 1998 120,000 -- John C. Georgiopoulos.............................. 2000 107,000 -- Vice President, Chief Administrative Officer 1999 80,000 -- and Treasurer 1998 80,000 -- John M. Ramistella................................. 2000 120,000 -- Vice President--Chartering 1999 120,000 -- 1998 120,000 --
For information about employment agreements to take effect upon the closing of this offering with some of our executive officers, see "--Employment Agreements and Incentive Bonus Program" below. EMPLOYMENT AGREEMENTS AND INCENTIVE BONUS PROGRAM We have entered into employment agreements with four of our executive officers, Peter C. Georgiopoulos, our Chairman and Chief Executive Officer, John P. Tavlarios, our President and Chief Operating Officer, James C. Christodoulou, our Vice President, Chief Financial Officer and Secretary, 67 and John C. Georgiopoulos, our Vice President, Chief Administrative Officer and Treasurer. These agreements take effect upon the closing of this offering. AGREEMENTS WITH MESSRS. PETER C. GEORGIOPOULOS AND TAVLARIOS The agreement with Peter C. Georgiopoulos has a term of four years. The agreement with Mr. Tavlarios has a term of three years. Both agreements provide for automatic renewal for additional renewal terms to the end of each fiscal year, unless the executive or we terminate the agreement on 90 days notice. The agreements provide a salary of $450,000 per annum for Peter C. Georgiopoulos and $350,000 per annum for Mr. Tavlarios. Both executives will be entitled to participate in our incentive bonus program. They will have target bonus opportunities of 60% of the salary for Peter C. Georgiopoulos and 45% of the salary for Mr. Tavlarios. Peter C. Georgiopoulos has the right to reasonably approve the Company's bonus plan as it applies to him. Under his agreement, we have agreed to provide Peter C. Georgiopoulos with a monthly automobile allowance of $2,500. The agreements provide that upon termination by us without cause or by the executive for good reason, in each case as defined in the relevant agreement, these executives will be entitled to salary at the date of termination plus a bonus equal to the average bonus earned over the preceding five years (beginning with 2001) or any shorter period that the executive was employed by us, but not less than any bonus to which the executive would be entitled for the year in which termination occurs, times the greater of the remainder of the term and two years. In these circumstances, Messrs. Peter C. Georgiopoulos and Tavlarios are also entitled for this period to medical, dental and insurance coverages (and as to Peter C. Georgiopoulos, an automobile benefit) substantially identical to those in place prior to termination for the relevant period. In the event that a payment to the executive after a change of control causes the executive to owe excise tax under Section 280G of the Internal Revenue Code, we have agreed to fund the amount of this tax on a "grossed-up" basis, intended to provide the executive with an amount sufficient to pay any tax owed on the funding payment. All incentive stock grants to Messrs. Peter C. Georgiopoulos and Tavlarios will vest in the event their employment is terminated by us without cause or by them for good reason. Under these agreements, each executive has agreed to protect our confidential information and not to solicit our employees for other employment for two years after termination. In his employment agreement, Peter C. Georgiopoulos has agreed that if his employment with us terminates prior to the fourth anniversary of the closing of this offering, and he undertakes substantial involvement in the management or operation of tankers transporting crude oil anywhere in the world for a competitor of the Company prior to that anniversary, he will surrender 320,000 shares of Common Stock issued to him in connection with our recapitalization if such activities occur before the first anniversary of the closing of this offering, which amount will be reduced to 240,000 shares for activities occurring before the second anniversary of the closing, 160,000 shares for activities occurring before the third anniversary of the closing and 80,000 shares for activities occurring before the fourth anniversary of the closing. Peter C. Georgiopoulos and Mr. Tavlarios have each agreed not to engage in these competitive activities for two years after the termination of their employment with us. These provisions will not apply following a change of control or in the event of termination of these executives by us without cause or by the executives with good reason. For purposes of these agreements, change of control is defined generally as the acquisition of more than 30% of the voting power of the company by any person or group other than Peter C. Georgiopoulos or Oaktree Capital Management, LLC and its affiliates if the acquiring person or group has greater voting power than Oaktree Capital Management, LLC and its affiliates or by any person other than Peter C. Georgiopoulos if the acquiring person has in excess of 50% of the voting power of the company, the sale of all or substantially all of our assets or any merger or similar transaction in which holders of our voting stock do not hold at least 51% of the voting stock of the surviving entity. 68 AGREEMENTS WITH MESSRS. CHRISTODOULOU AND JOHN GEORGIOPOULOS The agreements with Messrs. Christodoulou and John Georgiopoulos each have a term of one year. These agreements provide for a salary of $250,000 per annum for Mr. Christodoulou and $225,000 for John Georgiopoulos. Each executive will be entitled to participate in our incentive bonus program, with a target bonus of 35% of salary. Mr. Christodoulou will also receive a special bonus upon the closing of this offering of $50,000. Upon termination by us without cause, as defined in the relevant agreement, these executives will be entitled to salary at the date of termination for a period of one year. Under the agreements, if this type of termination occurs after a change of control, the executive will also be entitled to a bonus equal to the average bonus earned over the preceding five years (beginning with 2001) or any shorter period that the executive was employed by us, but not less than any bonus to which the executive would be entitled for the year in which termination occurs. Under the agreements, each executive has agreed to protect our confidential information and not to solicit our employees for other employment for two years after termination. They have also agreed not to undertake substantial involvement in the management or operation of tankers transporting crude oil anywhere in the world for one year after the termination of their employment with us. These provisions will not apply following a change of control (as defined in Peter Georgiopoulos' agreement) or in the event of termination of these executives by us without cause. INCENTIVE BONUS PROGRAM Following this offering, we intend to establish an incentive bonus program under which the Chief Executive Officer and persons designated by our compensation committe after consultation with the Chief Executive Officer will be entitled to receive cash awards equal to a percentage of an annual bonus pool. For information with respect to incentive stock grants to our executive officers, see "--Stock Incentive Plan." OPTION/SAR GRANTS IN LAST YEAR We did not grant stock options to the executive officers or directors named above or reprice any stock options during the year ended December 31, 2000. Prior to the consummation of this offering, we expect to grant options to some of our employees at the initial public offering price of our common stock. STOCK INCENTIVE PLAN On , 2001, we adopted the General Maritime Corporation 2001 Stock Incentive Plan. Under this plan our compensation committee, or another designated committee of our board of directors, may grant a variety of stock based incentive awards to our employees, directors and consultants whom the compensation committee believes are key to our success. The compensation committee may award incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock and performance shares. The compensation committee has broad latitude under this plan in determining who shall receive awards, the amount of awards and the terms and conditions of awards. However, no individual may receive awards in any year that together represent more than 750,000 shares of our common stock. The plan provides that, under certain circumstances, our compensation committee may adjust the numbers of shares available for award, as well as outstanding awards, to reflect changes in our corporate structure or other unusual events affecting us. We have designed this plan to allow awards to be "performance based" compensation within the meaning of Section 162(m) of the U.S. Internal Revenue 69 Code of 1986, and thus not to count against the million dollar cap on deductible compensation paid annually to our five top officers, if the compensation committee so chooses. The aggregate number of shares of our common stock available under the 2001 Stock Incentive Plan is 2,900,000 shares. As of the date of this prospectus, we had granted incentive stock options and nonqualified stock options to purchase 760,000 shares of common stock at the initial public offering price under the provisions of the 2001 Stock Incentive Plan. As of the closing date of this offering, none of the stock options will have been exercised and options for 90,000 shares will be vested and eligible for exercise. Options granted to date under the 2001 Stock Incentive Plan include grants of ten year options to purchase 350,000 shares to Peter Georgiopoulos, 240,000 shares to Mr. Tavlarios, 80,000 shares to each of Mr. Christodoulou and John Georgiopoulos and 2,000 to each of our directors who is not an executive officer. One quarter of the options granted to Peter Georgiopoulos vest on each of the first four anniversaries of the closing of this offering. With respect to the options granted to John Tavlarios, James Christodoulou and John Georgiopoulos, 20% will vest upon the closing of this offering and 20% will vest on each of the first four anniversaries of the closing. With respect to the options granted to our directors who are not executive officers, all will vest upon the closing of this offering. All options granted to date under this plan will vest upon a change of control. For this purpose, change of control is defined generally as the acquisition of more than 50% of the voting power of our company by any person or group other than Peter C. Georgiopoulos, the sale of all or substantially all of our assets or any merger or similar transaction in which holders of our voting stock do not hold at least 51% of the voting stock of the surviving entity. These options will be incentive stock options to the extent allowable under the Internal Revenue Code. LIMITATIONS ON LIABILITY AND INDEMNIFICATION We are a Marshall Islands corporation. The Marshall Islands Business Corporations Act provides that Marshall Islands corporations may indemnify any of their directors or officers who are or are threatened to be a party to any legal action resulting from fulfilling their duties to the corporation against reasonable expenses, judgments and fees (including attorneys' fees) incurred in connection with the legal action if the director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, or its equivalent, will not create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe his conduct was unlawful. However, no indemnification will be permitted in cases where it is determined that the director or officer was liable for negligence or misconduct in the performance of his duty to the corporation, unless the court in which the legal action was brought determines that the person is fairly and reasonably entitled to indemnity, and then only for the expenses that the court deems proper. A corporation is permitted to advance payment for expenses occurred in defense of an action if its board of directors decides to do so. In addition, Marshall Islands corporations may purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation against any liability asserted against him and incurred by him in his capacity as a director or officer whether or not the corporation would have the power to indemnify him against such liability under the provisions of the Marshall Islands Business Corporations Act. We currently have directors' and officers' liability insurance to provide our directors and officers with insurance coverage for losses arising from claims based on breaches of duty, negligence, errors and other wrongful acts. 70 RECAPITALIZATION AND ACQUISITIONS DESCRIPTION OF PLAN OF RECAPITALIZATION Our plan of recapitalization provides for the following: - Our acquisition, as of the date hereof, of seven limited partnerships owning 14 vessels for which corporations owned by Peter C. Georgiopoulos acted as managing general partner. - Our acquisition, as of the date of the closing of this offering, of five special purpose entities, each owning one vessel and owned by an affiliate of Wexford Capital LLC. Three of these special purpose vehicles are owned by limited liability companies for which affiliates of Peter C. Georgiopoulos acted as operating member and the remaining two are owned by limited partnerships in which Peter C. Georgiopoulos did not have any partnership interest. The commercial operations for all of these vessels were conducted by the old General Maritime Corporation, which was owned by Peter C. Georgiopoulos. - Our acquisition, which has not yet been completed, of three vessels which are owned and commercially operated by unaffiliated parties. Subject to the terms and conditions of each contribution agreement between us and the owner of each vessel which is described below, we will receive delivery of each vessel promptly following the closing of this offering. - Our acquisition, as of the date hereof, of all of the issued and outstanding shares of common stock of United Overseas Tankers Ltd. and all of the issued and outstanding shares of common stock of the old General Maritime Corporation. Pursuant to the recapitalization plan, a percentage of the shares to be outstanding prior to this offering will be issued to the former owners of our vessels. Each vessel owner will be allocated a portion of the total shares to be issued to all the vessel owners equal to the ratio of the relative value of the vessel or vessels it contributed, determined as described in the next paragraph, to the aggregate relative value of all of the vessels determined on this basis. The remaining shares to be outstanding prior to this offering will be issued to the old General Maritime Corporation, as further described below. The relative value of each vessel will be determined by a third party valuation as of a valuation date. For the limited partnerships and special purpose entities we acquired, this amount will be adjusted based on working capital. For each of the three vessels that we have agreed to acquire for shares of our common stock after the closing of this offering, the third party vessel valuation will be reduced by the amount paid in respect of debt secured by the vessel in the aggregate amount of $40.5 million and by any other cash paid in connection with the acquisition of these vessels. The process described in this paragraph is not intended to determine the value of the vessels or the entities that own them but rather to apportion the pre-offering equity in the company among the entities that own the vessels. The amount of stock initially delivered following delivery of the vessels will be based upon an estimate at the closing date. This amount will be finalized based on a closing balance sheet thereafter. Ten percent of the shares to be delivered in respect of the vessels will be held in escrow pending completion of the closing balance sheet calculations. In connection with the acquisition of the five special purpose entities (with five vessels) owned by affiliates of Wexford Capital LLC, we intend to repay indebtedness secured by these vessels in the aggregate amount of $59.0 million at the date of acquisition (the date of the closing of this offering) by drawing upon our new credit facility. For more information about this facility, see "Management's Discussion and Analysis of Financial Condition and Results of Operation--Liquidity and Capital Resources" and "Description of Indebtedness." Pursuant to the arrangements for our recapitalization, we have the right to deliver cash at the public offering price in place of up to 5% of the common stock to which a recipient would otherwise 71 be entitled in some circumstances to avoid our becoming subject to taxation under Section 883 of the Internal Revenue Code or becoming a "controlled foreign corporation" under the code. See "Tax Considerations." In connection with our recapitalization, we have agreed that we will be required to obtain the consent of holders of a majority of the shares issued in our recapitalization in some instances prior to our implementation of any stockholder rights agreement. See "Description of Capital Stock--Anti-takeover effects of provisions of our corporate documents--Restriction on Adoption of Stockholder Rights Agreements." CONTRIBUTION OF AFFILIATED LIMITED PARTNERSHIPS We are acquiring seven limited partnerships owning 14 vessels for which corporations owned by Peter C. Georgiopoulos acted as managing general partner pursuant to contribution agreements with the various partners. Pursuant to these agreements: - We are exchanging our common stock for all of the partnership interests in the partnerships. - We will deliver the common stock allocated to these vessels on the basis described above to the partners of these limited partnerships. The number of shares delivered to a partner will be calculated on the same basis as if the shares had been delivered to the limited partnerships in exchange for the vessels and the other assets and liabilities of the limited partnerships and the limited partnerships had then dissolved and distributed the shares to their partners at a value equal to the price to the public in this offering. The allocation of shares between the limited and general partners for this purpose will be recalculated on the first anniversary of the closing of this offering (using the average market price of the common stock during the 20 preceding trading days) or, if earlier, on the closing of any future public offering in which recipients of our common stock in the recapitalization sell (together with all common stock which they have previously sold in public offerings) at least one-third of the shares received by them in the recapitalization (in which case the recalculation will use the public offering price in that offering). The price used in this recalculation cannot be more than $5.00 more or less than the price to the public in this offering. This recalculation will apply only to shares which the general partners of these partnerships were entitled to receive as a percentage of the shares distributed to limited partners. An escrow will be established to hold the shares subject to this recalculation until the recalculation is complete. - The partnerships make representations and warranties to us in respect of matters relating to the partnerships, their assets, liabilities and operations. A six month indemnity escrow will be established upon the closing of the recapitalization holding 10% of the shares otherwise issuable to each partner of these partnerships. Our only remedy in respect of these representations is to the shares in this escrow. In the event of a payment from this escrow in respect of a partnership, Mr. Georgiopoulos has agreed to adjust the shares received by him in respect of the managing general partner interest in the partnership as if the amount paid from the escrow had never been received. The applicable partners of these partnerships also make representations and warranties to us as to authorization of the agreement, their qualification to receive our common stock under securities laws and their title to the partnership interests transferred. Our only remedy against a partner in respect of these representations is to the escrowed shares attributable to that partner. This limitation does not apply to our remedy in respect of the partners' authority and title representations, as to which we may seek to recover additional amounts up to the number of shares issued to the partner making the representation at the initial price to the public in this offering or an equivalent amount in cash if such shares have been disposed of. These representations and warranties survive six months after the date of 72 delivery of the vessels, except for those relating to the partners' authority and title which survive for 18 months. The governing documents of the limited partnerships of which affiliates of Peter C. Georgiopoulos acted as general partner generally provide that upon dissolution their limited partners are to receive their capital back plus a preferred return of 8% (though with respect to some limited partners of one limited partnership, the preferred return on a portion of their investment may be as high as 16%) and the return of some unreturned management fees previously paid to affiliates of the general partner. Thereafter, amounts are distributed so as to provide the general partner with 10% to 20% of the total amount distributed, other than amounts distributed as a return of capital. With limited exceptions, the general partner is not entitled to receive distributions until the limited partners (determined separately on a partner by partner basis) have also received (in addition to a return of capital and a preferred return with respect to their investments in that partnership) an amount equal to their unreturned capital and accrued but unpaid preferred return with respect to their investments in the other partnerships as well. In one partnership, which raised capital from its limited partners at two different times and at different valuations, the priority and amount of distributions among the classes of limited partners varies based primarily on whether the limited partners in the class contributed capital to the partnership in both rounds, only in the first round or only in the second. Under the terms of our recapitalization, if the partners are required to give up shares of our common stock to meet their indemnification obligations to us, the remaining shares each partner is entitled to will be reallocated under the ratios described above. This reallocation may result in the transfer of shares from the general partners to the limited partners. CONTRIBUTION OF SPECIAL PURPOSE ENTITIES We are acquiring five special purpose entities owning one vessel each at the closing of this offering pursuant to a contribution agreement. Three of these special purpose entities are currently owned by limited liability companies affiliated with Wexford Capital LLC for which affiliates of Peter C. Georgiopoulos acted as operating member. The remaining two special purpose entities are currently owned by limited partnerships affiliated with Wexford Capital LLC in which affiliates of Peter C. Georgiopoulos did not have any partnership interest. Pursuant to the contribution agreements: - We are exchanging our common stock allocated to each vessel on the basis described above for all of the stock of the special purpose entity owning the vessel. We will also repay an aggregate of $59.0 million of indebtedness secured by these vessels. - Each limited liability company or limited partnership makes representations and warranties to us in respect of matters relating to the limited liability company or limited partnership, its assets, liabilities and operations, its qualification to receive our common stock under securities laws, authorization of the agreement and title to the transferred shares. A six month indemnity escrow will be established upon the closing of the acquisition of each special purposes entity holding 10% of the shares otherwise issuable in respect of the special purpose entity. Our only remedy in respect of these representations is to the shares in this escrow. This limitation does not apply to our remedy in respect of the limited liability company's or limited partnership's authority and title representations, as to which we may seek to recover additional amounts up to the number of shares issued to the limited liability company or limited partnership at the initial price to the public in this offering or an equivalent amount in cash if such shares have been disposed of. These representations and warranties survive six months after the date of delivery of the vessel, except for those relating to the authority and title which survive 18 months. Because we provided commercial management services in respect of these vessels prior to this offering, we have represented to the transferor that the representations relevant to our activities are to our knowledge true and correct. 73 CONTRIBUTION OF VESSELS We are acquiring through three of our special purpose entities three vessels pursuant to contribution agreements. With respect to one of these vessels, Peter C. Georgiopoulos is party to an agreement with an owner of 50% of the entity owning the vessel, pursuant to which he is entitled to 20% of any increase in the value of this owner's interest in the ship. The remaining two vessels are owned by unaffiliated parties. Pursuant to the contribution agreement for each of these vessels: - We will (subject to the terms and conditions of the agreement) acquire the vessel in exchange for the amount of our common stock allocated to the vessel on the basis described above and the repayment of indebtedness secured by the vessel in the aggregate amount for all of these vessels of $40.5 million. As of the date hereof, we have issued the shares of our common stock allocated to the vessel to an escrow to be held until the closing of the acquisition of the vessel. At the closing, the escrow agent will transfer the shares to the sellers of the vessel. If the acquisition does not close, the escrow agent will return the shares to us, and Mr. Georgiopoulos will return a pro rata portion of the shares he received in respect of old General Maritime. - Our acquisition of the vessel is subject to conditions including the continuing accuracy of the representations and warranties of the seller and the seller's compliance with covenants and a satisfactory inspection by us. - The seller of the vessel makes representations and warranties to us in respect of matters relating to its authorization of the agreement, title to the vessel and qualification to receive our common stock under securities laws. Our remedy in respect of these representations will be limited to the number of shares issued to the seller at the initial price to the public in this offering or an equivalent amount in cash if such shares have been disposed of. These representations and warranties survive two years after the date of delivery of the vessel. - Following the closing of this offering, we will be required to pay the sellers a deposit equal to 10% of the appraised value of each vessel. The aggregate deposit will be $6.0 million. - These contribution agreements are subject to, among other things, our completion of this offering not later than June 15, 2001. If we fail to complete this offering by that date, we may not be able to purchase these three vessels. These contribution agreements also provide that if the seller of a vessel satisfies all of the conditions to the sale of the vessel and we fail to take delivery of the vessels, we will forfeit all or a portion of our $6.0 million deposit. CONTRIBUTION OF THE OLD GENERAL MARITIME CORPORATION On the date of this prospectus, we are acquiring the old General Maritime Corporation from Peter C. Georgiopoulos in exchange for an amount of common stock valued at the price to the public in this offering equal to 10% of the difference between the aggregate relative value of all of the 22 vessels contributed to us calculated as described in the third paragraph of this section captioned "Recapitalization" and the total value of all shares of common stock to be outstanding prior to this offering at that price. As a result of all of the contribution transactions described above and based on an average offering price of $18.00 per share, we estimate that Peter C. Georgiopoulos will receive shares of our common stock equal to (i) 1,013,536 shares in respect of the old General Maritime Corporation and (ii) 20,490,370 shares in exchange for or as a distribution in respect of the general partner interest in the vessel owners of 14 of our vessels. Peter C. Georgiopoulos will also retain his interest in the partnership owning one of the vessels that we have an agreement to acquire following the closing of this offering, the three limited liability companies affiliated with Wexford Capital LLC for which his affiliates acted as operating member and KS Stavanger Prince. If these entities distributed their shares of common stock they hold to the equity holders (which Peter C. Georgiopoulos cannot cause them to 74 do), Peter C. Georgiopoulos would receive 614,206 shares of our common stock. For further information, see the discussion under the heading entitled "Certain Relationships and Related Transactions" in this prospectus. ACQUISITIONS ACQUISITION OF VESSELS We have an agreement to acquire seven vessels for an aggregate purchase price of approximately $212.5 million. Our acquisition of each of these vessels is subject to conditions including the successful completion of this offering and a satisfactory inspection of each vessel in accordance with the terms and conditions of the acquisition agreement. Following the closing of this offering, we will be required to pay the seller a deposit equal to 10% of the purchase price for each vessel and will be required to pay the balance of the purchase price in cash at the time of delivery of each vessel. The aggregate deposit will be $21.2 million. Subject to the terms of the acquisition agreement, we expect to take delivery of each vessel free from charter over the next several months following the closing of this offering. The acquisition agreement is subject to, among other things, our completion of this offering not later than June 15, 2001. If we fail to complete this offering by that date, we may not be able to purchase these seven vessels. The acquisition agreement also provides that if the seller of the vessels satisfies all of the conditions to the sale of the vessels and we fail to take delivery of the vessels, we will forfeit all or a portion of our $21.2 million deposit. ACQUISITION OF UNITED OVERSEAS TANKERS LTD. We are acquiring all of the issued and outstanding shares of common stock of United Overseas Tankers Ltd. from its sole stockholder pursuant to a purchase agreement. Pursuant to this agreement: - We are paying approximately $6.2 million in cash from the proceeds of this offering, subject to adjustment, for all of the issued and outstanding shares of common stock of United Overseas Tankers. The actual purchase price will be $6.0 million increased or decreased by the company's accounts receivable and cash minus accounts payable and indebtedness. - The amount of cash initially paid for the issued and outstanding shares of common stock of United Overseas Tankers Ltd. is based upon an estimate at the closing date. This amount will be finalized based on a closing balance sheet. Pursuant to the purchase agreement, we have the right to withhold a percentage of the purchase price for two years to satisfy any claims pursuant to the purchase agreement. - United Overseas Tankers Ltd. and its sole stockholder make representations and warranties to us in respect of matters relating to the company, its assets, liabilities and operations, and authorization of the agreement and title to the transferred shares. Our remedy in respect of these representations is limited to the purchase price for the shares. These representations and warranties survive two years after the closing date. RESTRICTIONS ON TRANSFER Each of our shareholders and option holders has agreed not to offer, sell, offer to sell or otherwise convey to any unaffiliated party any of the shares of our common stock acquired in the recapitalization described above for a period of 180 days after the completion of this offering without the written consent of Lehman Brothers Inc. In addition, shares of our common stock acquired in the recapitalization will be considered restricted shares under Rule 144 of the Securities Act. You should read the discussion under the heading entitled "Shares Eligible For Future Sale" for further information concerning restrictions on transfers of these shares after this offering. 75 PRINCIPAL AND SELLING SHAREHOLDERS The following table provides information regarding beneficial ownership of our common stock before this offering and as adjusted to reflect the sale of common stock in this offering, by: - each person, group or entity who beneficially owns more than 5% of our stock; - each of our directors; - each of our named executive officers; - all of our directors and executive officers as a group; and - each selling shareholder. The following table reflects the number of shares of our common stock outstanding as of , 2001 and assumes completion of all of the transactions contemplated by our recapitalization. The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission governing the determination of beneficial ownership of securities. Under the rules of the Securities and Exchange Commission, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of that security, or "investment power," which includes the power to dispose of or to direct the disposition of that security. A person is also deemed to be a beneficial owner of any securities as to which that person has a right to acquire beneficial ownership presently or within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities, and a person may be deemed to be the beneficial owner of securities as to which that person has no economic interest. The amounts and percentages of our common stock beneficially owned by the persons set forth in the table below are based on the estimated delivery of shares in our recapitalization described under the caption "Recapitalization and Acquisitions" using estimates of the value of our vessels and the assets and liabilities to be transferred to us in the recapitalization as of March 31, 2001, and an assumed initial public offering price of $18.00. The value of these vessels, assets and liabilities will be initially estimated at the date of the recapitalization and shares delivered to former owners of vessels will thereafter be adjusted based upon adjustments to these amounts and other events provided in our plan of recapitalization. See "Recapitalization and Acquisitions." In addition, the number of shares outstanding after the closing of this offering will vary if we do not close any of the acquisitions of the three vessels that we have agreements to acquire for shares of common stock and repayment of indebtedness following the closing of this offering. 76
PERCENTAGE OF BENEFICIAL OWNERSHIP (3) ------------------------------------------ AFTER OFFERING NUMBER OF MAXIMUM NUMBER OF AFTER OFFERING (ASSUMING SHARES OF COMMON SHARES TO BE SOLD (ASSUMING NO EXERCISE OF STOCK BENEFICIALLY UPON EXERCISE OF EXERCISE OF OVER-ALLOTMENT OWNED BEFORE OVER-ALLOTMENT BEFORE OVER-ALLOTMENT OPTION IN NAME AND ADDRESS (1) OFFERING OPTION (2) OFFERING OPTION) FULL) - -------------------- ------------------ ----------------- -------- -------------- -------------- Peter C. Georgiopoulos (4).... 3,696,129 -- 12.7 10.3 10.3 John P. Tavlarios............. 48,000 (5) -- * * * James C. Christodoulou........ 16,000 (6) -- * * * John C. Georgiopoulos......... 16,000 (6) -- * * * Sir Peter G. Cazalet.......... 2,000 (7) -- * * * William J. Crabtree........... 2,000 (7) -- * * * Rex W. Harrington............. 2,000 (7) -- * * * Stephen A. Kaplan (8)......... 2,000 (7) -- * * * Peter S. Shaerf............... 2,000 (7) -- * * * The Beacon Group (9).......... 1,714,929 76,346 5.9 4.8 4.6 Blystad Shipholdings Inc. (10)........................ 1,483,541 0 5.1 4.1 4.1 Cerebrus Partners (11)........ 343,675 15,300 1.2 * * Credit Suisse First Boston (12)........................ 499,010 22,215 1.7 1.4 1.3 Farallon Capital Management LLC (13).................... 1,025,661 45,661 3.5 2.8 2.7 Highbridge Capital Management Inc. (14)................... 691,801 30,798 2.4 1.9 1.8 KS Stavanger Prince (15)...... 55,562 -- * * * LJR Tankers LLC (16).......... 601,987 26,800 2.1 1.7 1.6 Maritime Ventures Ltd (17).... 148,945 6,631 * * * Entities affiliated with Moore Capital Management, Inc. (18)................... 2,505,757 111,553 8.6 7.0 6.7 Oaktree Capital Management, LLC (8)..................... 8,941,390 398,059 30.8 24.8 23.7 Perry Capital Corp. (19)...... 1,204,382 53,638 4.2 3.3 3.2 Renaissance Technology Corp. (20).................. 432,164 19,239 1.5 1.2 1.1 Stern Joint Venture L.P. (21)........................ 44,531 1,982 * * * Valmora Partners L.P. (22).... 282,651 12,583 * * * Lawrence Heller (23).......... 85,930 3,825 * * * Wexford Capital LLC (24)...... 5,062,313 225,368 17.5 14.1 13.4 All executive officers and directors as a group (9 persons).................... 3,786,129 -- 13.0 10.5 10.5
- ------------------------------ * Represents less than 1% of the outstanding shares of common stock. (1) Except for Mr. Tavlarios, Mr. Christodoulou, Mr. John Georgiopoulos, Sir Peter Cazalet, Mr. Crabtree, Mr. Harrington and Mr. Shaerf, all of the shareholders identified in the table were beneficial holders of equity interests in entities which we acquired or from which we acquired vessels in connection with our recapitalization. (2) If the over-allotment option is exercised in full, then the selling shareholders will sell the number of shares indicated. If the over-allotment option is exercised in part, then the number of shares to be sold by each selling shareholder will be allocated pro rata, based on the maximum number of shares to be sold by each selling shareholder upon exercise of the over-allotment option. (3) Assumes closing of acquisitions of vessels we have agreements to acquire for shares of common stock after the closing of this offering. (4) Mr. Georgiopolous's address is c/o General Maritime Corporation, 35 West 56th Street, New York, NY 10019. The shares beneficially owned by Mr. Georgiopoulos do not include shares subject to options to purchase 350,000 shares of our common stock, 87,500 of which vest on each of the first four anniversaries of the closing of this offering or 614,206 shares beneficially owned by affiliates of Wexford Capital LLC which are owned by three limited liability companies for which affiliates of Mr. Georgiopoulos acted as operating member and KS Stavanger Prince, in which Peter C. Georgiopoulos has an interest. See discussion under heading "Recapitalization and Acquisitions--Description of Plan of Recapitalization--Contribution of the Old General Maritime Corporation." (5) Includes shares subject to options to purchase 48,000 shares of our common stock which vest upon the closing of this offering. Does not include shares subject to options to purchase 192,000 shares of our common stock, 48,000 shares of which vest on each of the first four anniversaries of the closing of this offering. 77 (6) Includes shares subject to options to purchase 16,000 shares of our common stock which vest upon the closing of this offering. Does not include shares subject to options to purchase 64,000 shares of our common stock, 16,000 shares of which vest on each of the first four anniversaries of the closing of this offering. (7) Includes shares subject to options to purchase 2,000 shares of our common stock which vest upon the closing of this offering. (8) Each of Mr. Kaplan's and Oaktree Capital Management LLC's address is 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. Oaktree Capital Management, LLC, a registered investment adviser under the Investment Advisers Act of 1940, as amended, is the general partner of OCM Principal Opportunities Fund, L.P. The shares reported herein are held directly by OCM Ajax Investments, Inc., a wholly owned subsidiary of the OCM Principal Opportunities Fund, L.P. Shortly after the offering, OCM Ajax Investments, Inc. will be dissolved and all of the shares held by OCM Ajax Investments, Inc. will be distributed to the OCM Principal Opportunities Fund, L.P. as its sole shareholder. As the general partner of the OCM Principal Opportunities Fund, L.P., Oaktree Capital Management, LLC will have voting and dispositive power over the shares that will be held by the OCM Principal Opportunities Fund, L.P. Although Oaktree Capital Management, LLC may be deemed to beneficially own such shares for purposes of Section 13 of the Securities Exchange Act of 1934, Oaktree Capital Management, LLC disclaims beneficial ownership of such shares except to the extent of its direct and indirect pecuniary interest therein. Mr. Kaplan, a director of our company, is a Principal of Oaktree Capital Management, LLC. To the extent Mr. Kaplan participates in the process to vote or dispose of such shares, he may be deemed under certain circumstances for purposes of Section 13 of the Securities Exchange Act of 1934 to be the beneficial owner of such shares. Mr. Kaplan, however, disclaims beneficial ownership of such shares except to the extent of his direct and indirect pecuniary interest therein. (9) The Beacon Group's address is c/o The Beacon Group Energy Investment Fund, 1221 Avenue of the Americas, New York, NY 10020. All of the shares beneficially owned by The Beacon Group are owned by GMC (Ajax) LLC, GMC (Alta) LLC, GMC (Jupiter) LLC, GMC (President) LLC and GMC (Nausicca) LLC, each a limited liability company owned by The Beacon Group Energy Investment Fund, an investment fund managed by The Beacon Group. (10) Blystad Shipholdings Inc.'s address is 70 Broad Street, Monrovia, Liberia. Blystad Shipholding Inc.'s ownership of these shares is subject to the closing of our acquisition of two vessels that we have agreements to acquire following the closing of this offering. (11) Cerebrus Partners' address is 450 Park Avenue, 28th Floor, New York, NY 10022. All of the shares beneficially owned by Cerebrus Partners are owned by Boss Investment Ltd., an investment fund managed by Cerebrus Partners. (12) Credit Suisse First Boston's address is 11 Madison Avenue, 4th Floor, New York, NY 10010. The shares beneficially owned by Credit Suisse First Boston are owned by Credit Suisse First Boston Management Corporation and Special Situation Holdings II, LTD--4 Ships, investment funds managed by Credit Suisse First Boston. (13) Farallon Capital Management LLC's address is 1 Maritime Plaza, Suite 1325, San Francisco, CA 94111. The shares beneficially owned by Farallon Capital Management LLC shares are owned by Farallon Maritime I, LLC, Farallon Maritime II, LLC and Farallon Maritime III, LLC, investment funds managed by Farallon Capital Management LLC. (14) Highbridge Capital Management Inc.'s address is 767 Fifth Avenue, 23rd Floor, New York, NY 10153. The shares beneficially owned by Highbridge Capital Management Inc. are owned by Alta Ajax Ltd., Alta Boss Ltd., Alta GM I Ltd., Alta Harriet Ltd., Nord Participants Ltd., and Alta Participants Ltd., corporations which are 33 1/3% owned by Cobra LDC, an investment fund managed by Highbridge Capital Management Inc. (15) KS Stavanger Prince's address is c/o DET Stavanger Ske Dampskibsselskab ASA, P.O. Box 40, N-4001, Stavanger Norway. Folke Hermanson and Anaconda Fund LP, each own 50% and have the same address of KS Stavanger Prince. KS Stavanger Prince's ownership of these shares is subject to the closing of our acquisition of the Genmar Prince which we have an agreement to acquire for shares of common stock and repayment of indebtedness following the closing of this offering. (16) LJR Tankers LLC's address is 28601 Chagrin Boulevard, Suite 550, Cleveland, OH 44122. (17) Maritime Ventures Ltd's address is c/o DGM Investments Inc., P.O. Box 38, Greenwood Lake, NY 10925. (18) Moore Capital Management, Inc.'s address is 1251 Avenue of the Americas, 53rd Floor, New York, NY 10020. Includes 1,257,025 shares held of record or beneficially by Multi-Strategies Fund Ltd. and 1,248,732 shares held of record or beneficially by Belvedere Maritime Holdings LLC. Moore Capital Management, Inc. exercises voting and investment power with respect to portfolio assets held by Multi-Strategies Fund Ltd. Mr. Louis M. Bacon is the majority shareholder of Moore Capital Management, Inc. and is the sole member of Belvedere Maritime Holdings LLC. As a result, Mr. Bacon may be deemed to be the beneficial owner of the aggregate shares held of record or beneficially by Multi-Strategies Fund Ltd. and Belvedere Maritime Holdings LLC. (19) Perry Capital Corp.'s address is 599 Lexington Avenue, 36th Floor, New York, NY 10022. The shares beneficially owned by Perry Capital Corp. are owned by Maritime Associates LLC and Alta Participants II Ltd., investment funds managed by Perry Capital Corp. 78 (20) Renaissance Technology Corp.'s address is 425 California Avenue, San Francisco, CA 94104. All of the shares beneficially owned by Renaissance Technology Corp. are owned by Meritage Fund L.P., an investment fund managed by Renaissance Technology Corp. (21) Stern Joint Venture L.P.'s address is 676 North Michigan Avenue, Suite 3600. (22) Valmora Partners L.P.'s address is 300 Crescent Court, Suite 900, Dallas, Texas 75205. (23) Lawrence Heller's address is c/o Quadrangle Offshore (Cayman) LLC's, 6 East 45th Street, Suite 805, New York, NY 10017. All of the shares beneficially owned by Lawrence Heller are owned by Quadrangle Offshore (Cayman) LLC, a limited liability company of which Mr. Heller is the sole member. (24) Wexford Capital LLC's address is 411 Putnam Avenue, Greenwich, CT 06830. The shares beneficially owned by Wexford Capital LLC, are owned by limited liability companies, 98% of which are owned by Wexford Partners V, L.P. and limited partnerships, approximately 73%, 21% and 6% of which are owned by Wexford Capital Partners II, L.P., Wexford Overseas Partner I, L.P. and Wexford Investment Company LLC, respectively. 79 DESCRIPTION OF INDEBTEDNESS GENERAL We have financed the acquisition of 14 of our vessels through 12 loan facilities entered into by our subsidiaries. These loan facilities are grouped in seven packages, five of which consist of both senior and junior loan facilities and two of which consist of only senior loan facilities. As of March 31, 2001, the aggregate principal amount outstanding under our senior loan facilities was $204.4 million and the aggregate principal amount outstanding under our junior loan facilities was $18.4 million. Subject to certain exceptions set forth in the credit agreements, the interest rates applicable from time to time during an interest period range from 1.125% to 2.0%, with respect to the senior loan facilities, and 3.0%, with respect to our junior loan facilities, over LIBOR. Eleven of our loan facilities are with a single lender as facility agent. REFINANCING We have received a commitment letter from our lead bank pursuant to which it has agreed, subject to, among other things, the successful completion of this offering, to refinance all of our existing loan facilities with a proposed new loan facility at the closing of this offering. This new loan facility will have a lower interest rate than our current loan facilities and will provide us with greater flexibility to properly manage our cash flow. The new loan facility will be in the aggregate amount of $300.0 million, comprised of a $200.0 million term loan and a $100.0 million revolving credit facility, and will have a five-year maturity. It will contain the same type of covenants discussed below but the covenants will be based on aggregate fleet values and financial data. The term loan will require us to make 20 quarterly principal repayments while the revolving credit facility will require us to pay the amount outstanding upon maturity. Both the term loan and the revolving credit facility will bear an interest rate of 1.5% over LIBOR for the outstanding portion while the revolving credit facility will require us to pay a fee of 0.625% over LIBOR for the unused portion. This new loan facility will be collateralized by all of the 19 vessels that we will acquire at the time of this offering and one of the vessels that we have an agreement to acquire following the closing of this offering. We intend to draw upon this new loan facility to repay indebtedness secured by the five vessels we have agreements to acquire at the closing of this offering and one vessel we have an agreement to acquire following the closing of this offering that are not owned by limited partnerships for which corporations owned by Peter C. Georgiopoulos acted as managing general partner. The commitment letter with respect to this new loan facility will expire on June 28, 2001 if our initial borrowing under this loan facility is not completed by that date. Our principal repayments for the term loan of the new credit facility scheduled through its five-year maturity are as follows: Principal Payments (dollars in millions)
YEAR PRINCIPAL PAYMENT - ---- ----------------- 2001................. $ 23.0 2002................. $ 46.0 2003................. $ 41.0 2004................. $ 36.0 2005................. $ 36.0 2006................. $ 18.0
We have received a commitment letter from our lead bank pursuant to which it has agreed, subject to several terms and conditions, to provide us with an additional credit facility after the closing of this offering to finance the acquisition of seven vessels that we have agreed to acquire for cash after the closing of this offering. The additional loan facility is expected to be in the aggregate amount of $165.0 million, comprised of a $115.0 million term loan and a $50.0 million revolving credit facility, and will have a five-year maturity. This additional credit facility is expected to contain the same types of 80 covenants discussed above, and will be based on the aggregate value of the seven vessels. The term loan is expected to require us to make 20 quarterly principal repayments while the revolving credit facility is expected to require us to pay the amounts outstanding upon maturity. Both the term loan and the revolving credit facility are expected to bear an interest rate of 1.5% over LIBOR for the outstanding portion while the revolving credit facility is expected to require us to pay a fee of 0.625% over LIBOR for the unused portion. We intend to use this loan as well as the proceeds from this offering and the available credit from our revolving credit facility described above to finance the acquisition of the seven vessels described above. This additional loan facility is expected to be collateralized by nine of the 10 vessels we have agreements to acquire following the closing of this offering. If we are unable to obtain this credit facility, we will not be able to acquire the seven additional vessels after the closing of this offering. The commitment letter with respect to this additional loan facility will expire on June 29, 2001 if our initial borrowing under this loan facility is not completed by that date. Our principal repayments for the term loan of the additional credit facility scheduled through its five-year maturity are expected to be as follows: Principal Payments (dollars in millions)
YEAR PRINCIPAL PAYMENT - ---- ----------------- 2001................. $ 13.5 2002................. $ 27.0 2003................. $ 21.5 2004................. $ 16.0 2005................. $ 16.0 2006................. $ 21.0
EXISTING LOAN FACILITIES REPAYMENT, MANDATORY PREPAYMENT AND VOLUNTARY PREPAYMENT Our senior loan facilities require monthly or quarterly principal repayments with a final payment for the remaining outstanding balance payable at the maturity of each loan facility. Our junior loan facilities require quarterly payments of interest with the full principal payable at maturity. Pursuant to the terms of some of our loan facility agreements, we have mandatory prepayment obligations pursuant to which we must prepay the amount the borrower subsidiary holds in cash in excess of a pre-determined amount. Subject to conditions set forth in our loan facility agreements, we may make voluntary prepayments, but in some circumstances must pay a prepayment fee equal to a percentage of the amount prepaid. We currently anticipate using a portion of the net proceeds of this offering to reduce our outstanding borrowings under our loan facilities by an aggregate amount of $70.0 million. SECURITY AND GUARANTY Our obligations under each of our loan facility agreements are secured by one or more of the following: - a mortgage on the vessel financed through the applicable loan facility; - pledges of our shares of capital stock of our subsidiaries; and - a lien on some or all of the assets of the subsidiary party to the loan facility agreement. Several of our loan facilities are collateralized by more than one vessel. Prior to our recapitalization, obligations of each borrower under the loan facilities for the financing of the purchase of GENMAR AJAX, GENMAR AGAMEMNON, GENMAR GABRIEL, GENMAR MACEDON, 81 GENMAR MINOTAUR, GENMAR CONSTANTINE, GENMAR GEORGE, GENMAR SPARTIATE, GENMAR ZOE and ALTA were guaranteed by entities affiliated with the borrower. Accordingly, we may need to guarantee the obligations of the borrowers under those loan facilities in connection with our recapitalization. FINANCIAL AND GENERAL COVENANTS We are required to comply with the financial and general covenants set forth in the loan facility agreements. We believe that the terms and conditions of our loan facilities are consistent with loan facilities incurred by other shipping companies. The financial covenants set forth in our loan facility agreements require the borrower and, in some cases, the guarantor of the borrower's obligations, to, among other things: - ensure that the fair market value of its vessel at all times equals or exceeds a percentage of the aggregate principal amount outstanding ranging from 110% to 140%, depending on the loan facility agreement; and - maintain at all times a minimum cash balances and working capital, defined for this purpose as current assets minus current liabilities not including the current portion of long-term debt or time charter termination fees ranging from a minimum working capital deficit of $750,000 to working capital of $750,000, depending on the loan facility agreement. The general covenants set forth in our loan facility agreements prohibit the borrower and, in some cases, the guarantor of the borrower's obligations, from, among other things: - incurring additional indebtedness; - permitting any liens on any of its assets; - selling its capital stock or permitting any other change to its shareholding; - making investments exceeding specific dollar amounts with the assets of the borrower subsidiary; - merging into or consolidating with other entities; - making any distributions of its profits or assets or payments of any dividends or other distributions; - changing the management of or the entity that manages the vessel or terminating or materially amending the management agreement relating to the vessel; and - selling or otherwise disposing of its vessel or other assets. EVENTS OF DEFAULT Upon the occurrence of an event of default under any of our loan facilities, the lenders may (1) require that all amounts outstanding under the loan facility be repaid immediately and terminate our ability to borrow under the relevant loan facility and (2) foreclose on the mortgages over the vessels and the related collateral. Each of the following events is, in some cases after the passage of time or notice or both, an event of default under our loan facilities: - non-payment of amounts due under the loan facilities; - breach of our covenants or undertakings; - misrepresentation; - failure to procure appropriate insurance for the vessels; - cross-default of certain other indebtedness; - event of insolvency or bankruptcy; - action for winding-up, dissolution or reorganization; and - assignment of any rights or obligations under the loan agreements. As of December 31, 2000, we were in default under our loan agreements for breaching several financial covenants. The lenders under the loan facility agreements have waived their right to take action with respect to any of these defaults. In addition, some of the covenants of our existing loan facility agreements were amended to reduce working capital and other requirements. 82 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OFFICE LEASE We use office space for our principal executive offices in a building located at 35 West 56th Street, New York, NY currently leased by GenMar Realty LLC, a company wholly-owned by Peter C. Georgiopoulos, our Chairman and Chief Executive Officer. We do not have a lease agreement with GenMar Realty, LLC and consequently our use of this space may be terminated at any time. We pay GenMar Realty, LLC an occupancy fee for use of this space in the amount of $55,000 per month. RECAPITALIZATION Prior to the transactions described in the section captioned "Recapitalization and Acquisitions," 14 of our vessels were owned by limited partnerships for which corporations owned by Peter C. Georgiopoulos acted as managing general partner. The general partners of these partnerships were entitled to receive commercial management fees. The old General Maritime Corporation which was also owned by Peter C. Georgiopoulos prior to our recapitalization was also entitled to receive a fee from the limited partners of these partnerships to compensate it for expenses relating to its organization of the partnerships. These affiliates of Peter C. Georgiopoulos received or were entitled to receive an aggregate of $496,244, $302,830 and $1,684,152, $1,094,330, $782,048 and $161,966 in these fees during the three months ended March 31, 2001, the three months ended March 31, 2000 and the years ending December 31, 2000, 1999, 1998 and 1997, respectively. Affiliates of the following shareholders were limited partners of the limited partnerships for which affiliates of Peter C. Georgiopoulos acted as managing general partner and made capital contributions in the amounts indicated: The Beacon Group ($19,530,202); Moore Capital Management, Inc. ($30,019,791); and Oaktree Capital Management, LLC ($44,450,000). The managing and administrative general partners of these limited partnerships, which were wholly-owned by Peter C. Georgiopoulos, made aggregate capital contributions to these limited partnerships of $3,078,912. The interests received in respect of these limited partnership contributions will be exchanged for our common stock in the transactions described under the caption "Recapitalization and Acquisitions - Description of Plan of Recapitalization." Three of our vessels were owned by affiliates of Wexford Capital LLC through limited liability companies. Affiliates of Peter C. Georgiopoulos acted as operating member of the limited liability companies which indirectly owned these vessels prior to the recapitalization transactions. Two of our vessels were owned by affiliates of Wexford Capital LLC through limited partnerships in which Peter C. Georgiopoulos did not have an interest prior to the recapitalization transactions. During the year ended December 31, 2000, the commercial operations for all of these vessels were conducted by the old General Maritime Corporation, which was owned by Peter C. Georgiopoulos. The old General Maritime Corporation was entitled to fees for commercially managing these vessels. The amounts recognized by the old General Maritime Corporation during this period in respect of these fees were $521,375. The following vessels were purchased by their owners from third parties within the last two years and transferred to us in the recapitalization transactions. The amount paid to these third parties is set forth in parentheses: GENMAR GABRIEL ($18.2 million); GENMAR ZOE ($28.5 million); GENMAR ALEXANDRA ($25.5 million); GENMAR MACEDON ($28.5 million); GENMAR SPARTIATE ($28.5 million); GENMAR PERICLES ($26.5 million); GENMAR HECTOR ($26.5 million); GENMAR LEONIDAS ($25,500,000); and GENMAR NESTOR ($24,500,000). For further information about our recapitalization, see "Recapitalization and Acquisitions." Oaktree Capital Management, LLC, as the general partner of OCM Principal Opportunities Fund, L.P. has acted as one of the lead limited partners in connection with our recapitalization and as such 83 we have agreed to reimburse the reasonable legal fees and expenses of Oaktree Capital Management, LLC in connection with that transaction. We have also agreed to provide Oaktree Capital Management, LLC with management consultation rights in connection with its and OCM Principal Opportunities Fund, L.P.'s status as a venture capital operating company. These rights include the right to select a representative to, among other things, (1) consult with and advise management of our company on significant business issues, (2) attend meetings of our board of directors and participate in the discussion of issues, (3) examine our books and records and visit and inspect our facilities and (4) request that we provide it with copies of all of our business and financial data as the representative may reasonably request in writing. These rights will terminate the date upon which Oaktree Capital Management, LLC, together with its affiliates, cease to beneficially hold a number of equity securities issued by us equal to or less than 10% of the equity securities held by Oaktree Capital Management, LLC and its affiliates upon the closing of this offering (as adjusted for any stock dividends, stock splits and the like with respect to such securities). LOANS In September 1999, in connection with our acquisition of the GENMAR GABRIEL, OCM Principal Opportunities Fund, L.P., one of our shareholders, loaned us $15,000,000 pursuant to a secured promissory note. The promissory note bore interest at the rate of 10% per annum and was due and payable in March 2000. From September 1999 to June 2000, we made interest payments to OCM Principal Opportunities Fund, L.P. in the aggregate amount of $825,000. In June 2000, OCM Principal Opportunities Fund, L.P. canceled the note and contributed to our capital $15,250,000, the principal amount of the note plus the then accrued but unpaid interest. Peter C. Georgiopoulos, our Chairman and Chief Executive Officer, has loaned us funds for working capital. These loans did not bear interest and were due and payable on demand. The amounts outstanding under these loans as of December 31, 2000, 1999 and 1998 were $0, $173,515 and $83,807, respectively. In the fourth quarter of 2000, we loaned Peter C. Georgiopoulos funds in the aggregate amount of $485,467. These loans do not bear interest and are due and payable on demand. The full amount of these loans was outstanding on March 31, 2001. SHARES ELIGIBLE FOR FUTURE SALE Upon completion of this offering, we will have 36,000,000 shares of common stock outstanding. Of these shares, the shares of common stock offered hereby will be freely tradable without restriction unless these shares are held by affiliates as defined in Rule 144(a) under the Securities Act. The remaining 29,000,000 shares of common stock to be outstanding after this offering will be restricted shares under the Securities Act. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144. Subject to the lock-up agreements described below and the provisions of Rule 144, additional shares will become available for sale in the public market. In general, under Rule 144, an affiliate of ours, or a person, or persons whose shares are aggregated, who has beneficially owned restricted shares for at least one year, will be entitled to sell that number of shares in any three-month period that does not exceed the greater of: - one percent of the then outstanding shares of our common stock, which will be approximately 360,000 shares immediately after this offering, or - the average weekly trading volume during the four calendar weeks preceding the date on which notice of the sale is filed with the Securities and Exchange Commission. Sales pursuant to Rule 144 are subject to certain requirements relating to manner of sale, notice and availability of current public information about us. A person or persons whose restricted shares are 84 aggregated who is not deemed to have been our affiliate at any time during the 90 days immediately preceding the sale and who has beneficially owned his or her shares for at least two years is entitled to sell his or her restricted shares pursuant to Rule 144(k) without regard to the limitations described above. Each of our officers and directors, all of our shareholders, and holders of options and warrants to purchase our stock have agreed not to offer, sell, contract to sell or otherwise dispose of, or enter into any transaction that is designed to, or could be expected to, result in the disposition of any shares of our common stock or other securities convertible into or exchangeable or exercisable for shares of our common stock or derivatives of our common stock owned by these persons prior to this offering, or common stock issuable upon exercise of options or warrants or the conversion of a note held by these persons, for a period of 180 days after the date of this prospectus without the prior written consent of the underwriters. This consent may be given at any time without public notice. We have entered into a similar agreement with the underwriters, except that we may grant options and sell shares pursuant to our option plan without their consent. There are presently no agreements between the underwriters and any of our shareholders or affiliates releasing them from these lock-up agreements prior to the expiration of the 180-day period. We intend to file a registration statement on Form S-8 under the Securities Act after the date of this prospectus, to register shares issued under our equity compensation plans in connection with stock option exercises. Under our 2001 Stock Incentive Plan, options to purchase 760,000 shares of common stock have been issued and options to purchase up to an additional 2,140,000 shares of common stock may be issued in the future. Therefore, after the effective date of the Form S-8 these shares of common stock, in addition to those referred to above, may be available for sale in the public market, subject to Rule 144 volume limitations applicable to affiliates and subject to lock-up agreements. In connection with our recapitalization, we entered into a registration rights agreement with the existing shareholders receiving 29,000,000 shares of common stock in our recapitalization. Pursuant to this registration rights agreements, we granted the existing shareholders the right to require up to five underwritten offerings (as well as additional underwritten offerings under shelf registration statements) commencing as early as six months following this offering covering their shares of common stock which the underwriters do not purchase to cover over-allotments, if any, and piggy-back registration rights to include their shares in any registration statement we file on our own behalf or on behalf of our other shareholders. We are also required to file an unlimited number of shelf registration statements for these shareholders beginning as early as the first anniversary of the closing of this offering. These registration rights have a term of ten years but expire with respect to particular shares of common stock once the shares become freely saleable without restriction as to volume under Rule 144. Prior to this offering, there has been no public market for our common stock. Sales of substantial amounts of common stock or the availability of shares for sale could adversely affect prevailing market prices of our common stock and our ability to raise additional capital. You should read the discussion under the heading entitled "Risk Factors--Future sales of our common stock could cause the market price of our common stock to decline" for further information about the effect future sales could have on the market price of our common stock. DESCRIPTION OF CAPITAL STOCK AUTHORIZED AND OUTSTANDING CAPITAL STOCK Our authorized capital stock consists of 75,000,000 shares of common stock and 5,000,000 shares of preferred stock. Prior to this offering, there were no shares of our common stock outstanding and we had no shareholders of record of our common stock. As of the date of this prospectus, there were 29,000,000 shares of our common stock outstanding and we had shareholders of record of our common stock. 85 After giving effect to the sale of the common stock in this offering, we will have a total of 36,000,000 shares of common stock outstanding, assuming that the underwriters do not exercise their over-allotment option. COMMON STOCK VOTING - one vote for each share held of record on all matters submitted to a vote of our shareholders - no cumulative voting rights - election of directors by plurality of votes cast - all other matters by majority of votes cast DIVIDENDS - our board of directors may only declare dividends out of legally available funds ADDITIONAL RIGHTS - common shareholders are entitled to receive ratably net assets, available after the payment of all debts and liabilities, upon our liquidation, dissolution or winding up - no preemptive rights - no subscription rights - no redemption rights - no sinking fund rights - no conversion rights The rights and preferences of common shareholders, including the right to elect directors, are subject to the rights of any series of preferred stock we may issue in the future. PREFERRED STOCK Under the terms of our amended and restated articles of incorporation, our board of directors has authority, without any vote or action of our shareholders, to issue up to 5,000,000 shares of "blank check" preferred stock in one or more series and to fix the related rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption terms (including sinking fund provisions) and liquidation preferences and the number of shares constituting a series or the designation of a series. The rights of the holders of our common stock will be subject to, and could be adversely affected by, the rights of the holders of any preferred stock that we may issue in the future. Our board of directors may designate and fix rights, preferences, privileges and restrictions of each series of preferred stock which are greater than those of our common stock. Our issuance of preferred stock could, among other things: - restrict dividends on our common stock; - dilute the voting power of our common stock; - impair the liquidation rights of our common stock; or - discourage, delay or prevent a change of control of our company. Although we currently have no plans to issue shares of blank check preferred stock, we may issue them in the future. 86 ANTI-TAKEOVER EFFECTS OF PROVISIONS OF OUR CHARTER DOCUMENTS. Several provisions of our amended and restated articles of incorporation and bylaws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors. BLANK CHECK PREFERRED STOCK Under the terms of our amended and restated certificate or incorporation, our board of directors has authority, without any further vote or action by our shareholders, to issue up to 5,000,000 shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management. CLASSIFIED BOARD OF DIRECTORS Our amended and restated articles of incorporation provides for the division of our board of directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our board of directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay shareholders who do not agree with the policies of the board of directors from removing a majority of the board of directors for two years. BUSINESS COMBINATIONS Although the Marshall Islands Business Corporations Act does not contain specific provisions regarding "business combinations" between corporations organized under the laws of the Republic of the Marshall Islands and "interested shareholders," we have included these provisions in our amended and restated articles of incorporation. Our amended and restated articles of incorporation contain provisions which prohibit us from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction in which the person became an interested shareholder, unless: - prior to the date of the transaction that resulted in the shareholder becoming an interested shareholder, our board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; - upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; - on or subsequent to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the board of directors and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested shareholder; or - the shareholder became an interested shareholder prior to the completion of this offering. For purposes of these provisions, a "business combination" includes mergers, consolidations, exchanges, asset sales, leases and other transactions resulting in a financial benefit to the interested shareholder and an "interested shareholder" is any person or entity that beneficially owns 15% or more of our 87 outstanding voting stock and any person or entity affiliated with or controlling or controlled by that person or entity. ELECTION AND REMOVAL OF DIRECTORS Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our by-laws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our amended and restated articles of incorporation also provide that our directors may be removed only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our common stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors. LIMITED ACTIONS BY SHAREHOLDERS Our amended and restated articles of incorporation and our by-laws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our amended and restated articles of incorporation provide that, subject to certain exceptions, only our board of directors may call special meetings of our shareholders. Our amended and restated articles of incorporation also contain advance notice requirements for proposing matters that can be acted on by the shareholders at a shareholder meeting. Accordingly, a shareholder may be prevented from calling a special meeting for shareholder consideration of a proposal over the opposition of our board of directors and shareholder consideration of a proposal may be delayed until the next annual meeting. RESTRICTION ON ADOPTION OF STOCKHOLDER RIGHTS AGREEMENTS In connection with our recapitalization, we have agreed that for four years we will be required to obtain the consent of holders of a majority of the shares issued in our recapitalization prior to our implementation of any stockholder rights agreement under which our stockholders would be issued rights under which stockholders (other than the acquiring person) would be allowed to purchase our securities at a discount of more than 20% upon a person becoming the owner of more than a specified percentage or number of our securities. See "Recapitalization and Acquisitions." TRANSFER AGENT The transfer agent and registrar for our common stock is Mellon Investor Services LLC. NEW YORK STOCK EXCHANGE LISTING We intend to apply for approval of our common stock for quotation on the New York Stock Exchange under the symbol "GMR." TAX CONSIDERATIONS TAXATION OF GENERAL MARITIME The following discussion is a summary of the principal United States federal and Marshall Islands tax laws applicable to our business. The following discussion of tax matters, as well as the conclusions regarding certain issues of tax law that are reflected in the discussion, are based on current law and upon the advice we received from our counsel. The advice is based, in part, on representations made by our officers, some of which relate to anticipated future factual matters and circumstances. We cannot assure you that existing laws or their interpretations will not change, that any change in existing laws or in their interpretations will not be retroactive, or that anticipated future factual matters and circumstances will in fact occur. The following discussion is for general information only. Our views and 88 our counsels' views have no binding effect or official status of any kind, and we cannot assure you that the conclusions discussed below would be sustained if challenged by taxing authorities. UNITED STATES FEDERAL INCOME TAXATION The following discussion is based on the advice of Kramer Levin Naftalis & Frankel LLP, special United States tax counsel to the company. The following discussion is based upon the provisions of the U.S. Internal Revenue Code, or the "Code", existing and proposed U.S. Treasury Department regulations promulgated thereunder, administrative rulings and pronouncements and judicial decisions as of the date of this offering, all of which are subject to change, possibly with retroactive effect. Any such change could alter the tax consequences discussed herein. 89 It is anticipated that substantially all of our gross income will be derived from and attributable to the ownership, use and operation of vessels in international commerce by us and our wholly-owned subsidiaries and will principally consist of income from time and voyage charters and from the performance of services directly related to the ownership, use and operation of our vessels. This income is referred to in this discussion as shipping income. For purposes of this discussion, unless stated otherwise references to our shipping income include the shipping income of our subsidiaries and references to our United States taxation include the United States taxation of our subsidiaries. SECTION 883 EXEMPTION If we qualify for an exemption from United States federal income tax pursuant to Section 883 of the Code, our shipping income will not be subject to federal income tax in the United States. We believe that we will qualify for the exemption immediately following the offering. However, there can be no assurance that we will satisfy the exemption requirements immediately after the offering or that we will continue to qualify for the exemption under Section 883 of the Code in the future. Our shipping income will qualify for the exemption under Section 883 of the Code for a taxable year if: - our subsidiary generating the shipping income (or our company, with respect to shipping income of a subsidiary that is not treated as a corporation for United States federal income tax purposes) is organized in a foreign country that grants an equivalent exemption from tax to corporations organized in the United States and - either - our stock is primarily and regularly traded on an established securities market in the United States or in a country that provides an equivalent exemption during the applicable taxable year (the "publicly traded requirement"); - more than 50% of our stock is treated as owned, directly or indirectly, for at least half of the number of days in the taxable year by "qualified shareholders" (the "ownership requirement") or - we are a controlled foreign corporation (as defined below) and other applicable conditions are met. The U.S. Treasury Department has recognized the Cayman Islands, the Bahamas and Panama, where our subsidiaries are organized, as well as the Republic of the Marshall Islands, our country of organization, as foreign countries that grant an equivalent exemption to U.S. corporations. Our qualification for the Section 883 exemption should thus depend solely upon whether we meet the publicly traded requirement, the ownership requirement or the controlled foreign corporation test. As explained below, we expect to satisfy the publicly traded requirement immediately following the offering. However, there can be no assurance that we will do so or that we will continue to satisfy the test in the future. We do not anticipate satisfying the ownership test immediately following the offering. Nor do we anticipate being a controlled foreign corporation. See "Tax Consequences to Holders-United States federal income tax consequences to holders" below. In addition, under the proposed regulations discussed below, even if we satisfy the publicly traded requirement, certain of our subsidiaries may not qualify for the Section 883 exemption for the current year if the offering does not occur on or prior to July 1 of this year. This is so since under the proposed regulations a subsidiary of a publicly traded corporation will qualify for the Section 883 exemption only if the publicly traded corporation owns the subsidiary for at least half of the number of days of the subsidiary's taxable year, which may not be true with respect to certain of our subsidiaries if this offering does not occur on or prior to July 1 of this year. 90 THE PUBLICLY TRADED AND OWNERSHIP REQUIREMENTS There are currently no rules in effect that interpret the publicly traded and ownership requirements. However, proposed regulations were recently issued that define the scope of the publicly traded and ownership requirements. For purposes of the discussion below, it is assumed that the proposed regulations, or rules similar to those set forth in the proposed regulations, will be applicable to determine satisfaction of the publicly traded and ownership requirements. However, there can be no assurance that the regulations, when finalized, will not differ from the proposed regulations. THE PUBLICLY TRADED REQUIREMENT. The proposed regulations define the term "primarily and regularly traded on an established securities market," for purposes of the publicly traded requirement. In addition, in interpreting the publicly traded requirement prior to the issuance of the proposed regulations, the Internal Revenue Service, in a technical advice memorandum (on which taxpayers cannot rely), had looked to regulations that interpret a similar publicly traded requirement in another context. Those regulations in their final form are similar to the proposed regulations. Under the proposed regulations, stock traded on an established security market in the United States will be considered to be "primarily and regularly traded" on that market if: - the number of shares that are traded during any taxable year on that market exceeds the number of shares traded during that year on any other established securities market; - stock representing 80% or more of the issuer's outstanding shares (by voting power and value) is listed on that market; and - the stock is regularly quoted by brokers and dealers making a market in the stock. Following the offering, we anticipate that all of our common stock, the sole class of our stock that is issued and outstanding, will be listed on the New York Stock Exchange, which is an established securities market in the United States. In addition, we anticipate that our stock will be regularly quoted by brokers and dealers making a market in our stock. However, the proposed regulations also provide, in pertinent part, that stock will not meet the publicly traded requirement for any taxable year in which 50% or more of the outstanding shares of the stock is owned (within the meaning of the proposed regulations) at any time during the taxable year by persons who each own (or are treated as owning) 5% or more of the value of the outstanding shares of the stock. We anticipate that, immediately following the offering, and taking into account all of the shares to be outstanding upon completion of the recapitalization, those persons owning 5% or more of our stock will own less than 50%, but more than 40%, of our stock, assuming that no person acquires 5% or more of our stock pursuant to the offering. In addition, prior to the recapitalization, no shares of our company were issued and outstanding. Therefore, we expect to satisfy the publicly traded requirement immediately following the offering. However, 50% or more of our stock may be held by 5% shareholders immediately following the offering, and thus we may not satisfy the publicly traded requirement, if one or more persons purchases 5% or more of our outstanding stock in the offering. Similarly, even if we satisfy the publicly traded requirement immediately after the offering, we may not satisfy the requirement in the future due to persons acquiring and holding 5% or more of our stock. In addition, we may not be treated as satisfying the publicly traded requirement immediately before or immediately after the offering if at the time of the commencement of the recapitalization, or at the time of the closing of the offering, all of the shares to be outstanding upon completion of the recapitalization were not taken into account. 91 THE OWNERSHIP REQUIREMENT. The proposed regulations also address whether a corporation's shareholders are "qualified shareholders" for purposes of the ownership requirement. In general, shareholders will be qualified shareholders only if the shareholders: - are residents of a country that grants an equivalent exemption (as discussed above); - do not own their interests in the corporation through bearer shares; - provide required documentation to the corporation and the corporation satisfies applicable reporting requirements; and - are either (A) individuals (other than beneficiaries of a pension fund), (B) certain governmental entities, (C) foreign corporations organized in a country that grants an equivalent exemption and that satisfy the publicly traded requirement, (D) certain not-for-profit organizations organized in a country that grants an equivalent exemption or (E) beneficiaries of certain pension funds. For these purposes, stock owned by a corporation, partnership, estate or trust is treated as proportionately owned by its shareholders, partners or beneficiaries, as the case may be. We do not believe that we will satisfy the ownership requirement following the offering since we do not believe that more than 50% of our stock will be owned by residents of countries that grant equivalent exemptions. However, if in the future we believe that more than 50% of our stock is owned by residents of countries that grant equivalent exemptions (and that we do not satisfy the publicly traded requirement), we may seek documentation from our shareholders that may enable us to satisfy the ownership requirement. GROSS INCOME TAX If our shipping income is not exempt from U.S. federal taxation under Section 883 of the Code (see SECTION 883 EXEMPTION above), our shipping income will be subject to United States federal tax in an amount equal to 2% of our gross shipping income from transportation beginning or ending in the United States, provided the income is not otherwise subject to United States federal tax on a net income basis (see NET INCOME TAX below). Based upon our anticipated shipping operations, our vessels will be operated in various parts of the Atlantic basin and will engage in transportation both to or from U.S. ports and between non-U.S. ports. We do not anticipate generating any shipping income attributable to transportation that both begins and ends in the United States (coastwise trade). Our vessels are prohibited by law from engaging in coastwise trade, because our vessels were not built in the U.S. and do not sail under the U.S. flag. None of our shipping income attributable to transportation exclusively between non-U.S. ports should be subject to United States federal income tax. On average, in 1998, 1999 and 2000, approximately 98% of our gross revenues was attributable to the transportation of cargoes to or from U.S. ports. Therefore, if we were subject to the gross income tax in those years, approximately 98%, on average, of our gross shipping income would have been subject to United States federal tax at a 2% rate. NET INCOME TAX If we do not qualify for an exemption under Section 883 of the Code, then our shipping income will be subject to a United States net income tax, in lieu of the gross income tax discussed above, to the extent our shipping income is treated as "effectively connected" with the conduct by us of a U.S. trade or business. Any "effectively connected" shipping income, net of applicable deductions, would be subject to the United States federal corporate income tax currently imposed at rates of up to 35% of net income. In addition, we may be subject to a 30% branch profits tax on earnings effectively connected with the conduct of the trade or business, as determined after allowance for applicable 92 adjustments, and on certain interest paid or deemed paid attributable to the conduct of the U.S. trade or business. Our U.S. source shipping income would be considered "effectively connected" with the conduct of a U.S. trade or business only if: - we have (or are considered to have) a fixed place of business in the United States involved in the earning of shipping income, which likely will be the case, and - substantially all of our U.S. source shipping income is attributable to regularly scheduled transportation, which generally means the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States (or, in the case of income from bareboat charters, is attributable to a fixed place of business in the United States). We do not intend to have (or permit circumstances which would result in our having) any of our subsidiaries' vessels operating to or from the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities as described in this offering, none of our U.S. source shipping income should be effectively connected with the conduct of a U.S. trade or business. In addition, none of our foreign source shipping income should be effectively connected income. Therefore, none of our shipping income should be subject to a net income tax in the United States. This determination does not apply to any income that we may derive from bareboat charters; however, we do not anticipate having a material amount of income from bareboat charters. In addition to the United States income taxes that may be imposed with respect to our shipping income if we do not qualify for the Section 883 exemption, we may be subject to United States net income tax (regardless of whether we qualify for the Section 883 exemption) with respect to all or a portion of our income, if any, that is not shipping income and that is effectively connected to the conduct of a trade or business in the United States. GAIN ON SALE OF VESSELS Except to the extent that gain from the sale of a vessel qualifies for the Section 883 exemption, any U.S. source gain on the sale of a vessel may be partly or wholly subject to U.S. federal income tax as "effectively connected" income (determined under rules different from those discussed above) under the above described net income tax regime. However, we intend to structure sales of vessels in a manner, including but not limited, to effecting the sale and delivery of vessels outside of the United States, that will not give rise to U.S. source gain. MARSHALL ISLANDS TAXATION Based on the advice of Dennis J. Reeder, Esq., our Marshall Islands tax counsel, we will not be subject to taxation under the laws of the Republic of the Marshall Islands, and distributions to us by our subsidiaries also will not be subject to any Marshall Islands tax. TAX CONSEQUENCES TO HOLDERS UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS The following discussion is a summary of the material U.S. federal income tax consequences to initial holders of our common stock who acquire our common stock in the offering. The discussion which follows is based on the Code, existing and proposed Treasury Department regulations promulgated thereunder, administrative rulings and pronouncements and judicial decisions as of the 93 date hereof, all of which are subject to change, possibly with retroactive effect. Any such change could alter the tax consequences discussed herein. The discussion below, except where specifically noted, does not address the effects of any state, local or non-United States tax laws. In addition, the discussion below relates to persons who hold our common stock as a capital asset. The tax treatment of a shareholder may vary depending upon the shareholder's particular situation, and some shareholders, including, for example, insurance companies, tax-exempt organizations, financial institutions, and broker-dealers, may be subject to special rules not discussed below. As used in this section, a "U.S. holder" means a holder of our common stock who is, for U.S. federal income tax purposes: - a citizen or resident of the U.S.; - a corporation, partnership or other entity, other than a trust, created or organized in or under the laws of the U.S. or any political subdivision thereof; - an estate whose income is subject to U.S. federal income tax regardless of its source; or - a trust - if, in general, a court within the U.S. is able to exercise primary supervision over its administration and one or more U.S. persons have authority to control all of its substantial decisions or - that has a valid election in effect under applicable U.S. treasury regulations to be treated as a U.S. person. As used in this section, a non-U.S. holder is a holder of our common stock who is not a U.S. holder. U.S. HOLDERS DISTRIBUTIONS. Distributions made to U.S. holders on our common stock will be treated as dividends and taxable as ordinary income to the extent that the distributions are made out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any distributions in excess of our earnings and profits will be treated first as a tax-free return of capital which reduces the U.S. holder's tax basis in our common stock to the extent thereof, and thereafter as capital gain from the sale or exchange of our common stock. The U.S. federal income tax treatment described in the immediately preceding sentence applies whether or not the distributions are treated as a return of capital for non-tax purposes. Amounts taxable as dividends generally will be treated as foreign source "passive" income for foreign tax credit purposes, provided, however, that the ratable portion of dividends, if any, paid out of earnings and profits of General Maritime from U.S. sources may be treated as U.S. source dividends for foreign tax credit purposes. The amount of any distribution of property other than cash will be the fair market value of the property on the date of distribution. U.S. holders of our common stock that are corporations generally will not be entitled to claim a dividends received deduction with respect to distributions by us, because we are a foreign corporation. DISPOSITION. Gain or loss recognized by a U.S. holder of our common stock on the sale, exchange or other taxable disposition of our common stock will be subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the amount realized on the sale, exchange or other disposition and the U.S. holder's adjusted tax basis in the common stock surrendered. The gain or loss will be long term capital gain or loss if the U.S. holder's holding period for our common stock is more than one year. Any gain or loss so recognized generally will be United States source. 94 ANTI-DEFERRAL REGIMES. Notwithstanding the above rules regarding distributions and dispositions, special rules may apply to some U.S. holders (or to the direct or indirect beneficial owners of some non-U.S. holders) if one or more anti-deferral regimes discussed below are applicable. The rules regarding each of these regimes are complex, and holders should consult their tax advisers with respect to the applicability and impact of these regimes to their ownership of our shares. CONTROLLED FOREIGN CORPORATION. We will be a "controlled foreign corporation" for a taxable year if more than 50% of our stock is owned by United States persons who own (or are treated as owning under applicable rules) 10% or more of our voting stock ("10% U.S. shareholders"). If we are a controlled foreign corporation, our 10% U.S. shareholders will be required to include in income each year their pro-rata share of our and our subsidiaries' "Subpart F income," which includes shipping income. However, our 10% U.S. shareholders in general would not be required to include in income any dividends distributed by us to the extent of any Subpart F income previously included in income by them. A controlled foreign corporation's 10% U.S. shareholders may also be required to treat some or all of the gain realized upon the disposition of their controlled foreign corporation stock as ordinary income, rather than as capital gain. We do not believe that we will be a controlled foreign corporation immediately following the offering. However, there can be no assurance that we will not be a controlled foreign corporation immediately after the offering or that we will not be a controlled foreign corporation in the future. PASSIVE FOREIGN INVESTMENT COMPANY. We will be a "passive foreign investment company" if either: - 75% or more of our gross income (including the gross income of any subsidiary) in a taxable year is passive income or - at least 50% of our assets (including the assets of any subsidiary) in a taxable year (averaged over the year and generally determined based upon value) are held for the production of, or produce, passive income. While not entirely clear, passive income should not include shipping income. However, passive income would include amounts derived by reason of the temporary investment of funds raised in the offering. We do not expect to be a passive foreign investment company at the conclusion of the offering or in the foreseeable future. However, because there are uncertainties in the application of the passive foreign investment company rules, and because it is an annual test, there can be no assurance that we will not become a passive foreign investment company in any year. If we become a passive foreign investment company (and regardless of whether we remain a passive foreign investment company), each U.S. person who is treated as owning our shares for purposes of the passive foreign investment company rules would be liable to pay tax, at the then prevailing income tax rates on ordinary income, plus interest, upon certain distributions and upon disposition of our shares at a gain, as if the distribution or gain had been recognized ratably over the U.S. person's holding period of our shares. The tax at ordinary rates and interest would not be imposed if the U.S. person either elects to treat the company as a "qualified electing fund" or makes a mark-to-market election, as discussed below. Further, if a qualified electing fund is not made, a U.S. holder that acquires our shares from a decedent (other than certain non-resident aliens) whose holding period for the shares includes time when we were a PFIC would be denied the normally available step-up of income tax basis for the shares to fair market value at the date of death and instead would have a tax basis limited to the decedent's tax basis. The above rules relating to the taxation of distributions and dispositions will not apply to a U.S. person who has made a qualified electing fund for all taxable years that the holder has held its shares and the company was a passive foreign investment company. Instead, each U.S. holder who has made a qualified electing fund is required for each taxable year to include in income a pro rata share of the 95 ordinary earnings of the company as ordinary income and a pro rata share of the net capital gain of the company as long-term capital gain, regardless of whether the company has made any distributions of the earnings or gain. If we become a passive foreign investment company and provided our shares are marketable, a U.S. person may make a mark-to-market election. Under the election, any excess of the fair market value of the shares at the close of any tax year over the U.S. person's adjusted basis in the shares is included in the U.S. person's income as ordinary income. In addition, the excess, if any, of the U.S. person's adjusted basis at the close of any taxable year over fair market value is deductible in an amount equal to the lesser of the amount of the excess or the net mark-to-market gains on the shares that the U.S. person included in income in previous years. If a U.S. person makes a mark-to-market election after the beginning of its holding period, the U.S. person does not avoid the interest charge rule discussed above with respect to the inclusion of ordinary income attributable to periods before the election. PERSONAL HOLDING COMPANY AND FOREIGN PERSONAL HOLDING COMPANY. We will be classified as a personal holding company for United States federal income tax purposes for a taxable year if: - at any time during the last half of our taxable year, five or fewer individuals (without regard to their citizenship or residency) own or are deemed to own (under applicable attribution rules) more than 50% of our stock by value; - we receive 60% or more of our U.S.-related gross income, as specifically adjusted, from certain passive sources; and - we are not a passive foreign investment company or a foreign personal holding company (defined below). A personal holding company is taxed (currently at a rate of 39.6%) on a portion of its undistributed taxable income. We believe that we are not a personal holding company. However, no assurance can be given that the PHC rules will not apply to us in the future. We will be a foreign personal holding company, for United States federal income tax purposes if both: - five or fewer individuals who are United States citizens or residents own or are deemed to own (under applicable attribution rules) more than 50% of all classes of our stock measured by voting power or value and - we receive at least 60% (50% in years other than our first taxable year as a foreign personal holding company) of our gross income (regardless of source), as specifically adjusted, from certain passive sources. If we are classified as a foreign personal holding company, a portion of our "undistributed foreign person holding company income" (as defined for U.S. federal income tax purposes) would be imputed to all of our shareholders who are U.S. shareholders on the last taxable day of our taxable year, or, if earlier, the last day on which we are classifiable as a foreign personal holding company. That portion of our income would be taxable as a dividend, even if no cash dividend is actually paid. U.S. shareholders who dispose of their shares prior to the date set forth above would not be subject to a tax under these rules. We believe that we are not an FPHC. However, no assurance can be given that we will not qualify as an FPHC in the future. INFORMATION REPORTING AND BACKUP WITHHOLDING. Certain U.S. holders may be subject to information reporting with respect to payments of dividends on, and the proceeds of the disposition of, our common stock. U.S. holders who are subject to information reporting and who do not provide appropriate information when requested may be subject to backup withholding at a 31% rate. U.S. 96 holders should consult their tax advisors regarding the imposition of backup withholding and information reporting with respect to distributions on, and dispositions of, our common stock. NON-U.S. HOLDERS DISTRIBUTIONS AND DISPOSITION. In general, and subject to the discussion below under "Information reporting and backup withholding," a non-U.S. holder will not be subject to U.S. federal income or withholding tax on income from distributions with respect to, or gain upon the disposition of, our common stock, unless (1) the income or gain is effectively connected with the conduct by the non-U.S. holder of a trade or business in the U.S., (2) in the case of gain realized by an individual non-U.S. holder upon a disposition of our common stock, the non-U.S. holder is present in the U.S. for 183 days or more in the taxable year of the sale and other applicable conditions are met or (3) with respect to distributions, at least 25% of our gross income for the three year period preceding the year the distribution is declared is effectively connected with the conduct by us of a trade or business in the United States, which we do not anticipate will be the case. In the event that clause (1) in the preceding paragraph applies, the income or gain generally will be subject to regular U.S. federal income tax in the same manner as if the income or gain, as the case may be, were realized by a U.S. holder. In addition, if the non-U.S. holder is a non-U.S. corporation, the income or gain may be subject to a branch profits tax at a rate of 30%, although a lower rate may be provided by an applicable income tax treaty. In the event that clause (2), but not clause (1), in the preceding paragraph applies, the gain generally will be subject to tax at a rate of 30%, or a lower rate as may be provided by an applicable income tax treaty. In the event that clause (3), but not clause (1), in the preceding paragraph applies, a portion of the distribution may be subject to U.S. federal withholding tax at a rate of 30%, or a lower rate as may be provided by an applicable income tax treaty. INFORMATION REPORTING AND BACKUP WITHHOLDING. If our common stock is held by a non-U.S. holder through a non-U.S., and non-U.S. related, broker or financial institution, information reporting and backup withholding generally would not be required with respect to distributions on and dispositions of our common stock. Information reporting, and possibly backup withholding, may apply if our common stock is held by a non-U.S. holder through a U.S., or U.S. related, broker or financial institution and the non-U.S. Holder fails to provide appropriate information. Non-U.S. holders should consult their tax advisors regarding the imposition of backup withholding and information reporting with respect to distributions on and dispositions of our common stock. MARSHALL ISLANDS TAX CONSEQUENCES TO HOLDERS Based on the advice of Dennis J. Reeder, Esq., our Marshall Islands tax counsel, as of the date of this prospectus, there is no Marshall Islands income, corporation or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by non-residents of the Marshall Islands in respect of capital gains realized on a disposition of shares of our common stock or in respect of distributions by us with respect to shares of our common stock. This discussion does not, however, apply to the taxation of persons ordinarily resident in the Marshall Islands. Marshall Islands holders should consult their tax advisors regarding possible Marshall Islands taxes with respect to dispositions of, and distributions on, shares of our common stock. UNDERWRITING Subject to the terms and conditions of the underwriting agreement, the underwriters, for whom Lehman Brothers Inc., ABN AMRO Rothschild LLC and Jefferies & Company, Inc. are acting as representatives, have severally agreed to purchase from us the following respective number of shares of 97 common stock at the initial public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus:
UNDERWRITERS NUMBER OF SHARES - ------------ ---------------- Lehman Brothers Inc......................................... ABN AMRO Rothschild LLC..................................... Jefferies & Company, Inc.................................... --------- Total....................................................... 7,000,000 =========
98 The underwriting agreement provides that the obligations of the several underwriters to purchase the shares of common stock offered hereby are subject to certain conditions. The conditions contained in the underwriting agreement include the requirement that the representations and warranties made by us to the underwriters are true, that there is no material change in the financial markets and that we deliver to the underwriters customary closing documents. The underwriters are obligated to purchase all of the shares of common stock offered hereby, other than those covered by the over-allotment option described below, if any of the shares are purchased. The underwriters propose to offer the shares of common stock to the public at the public offering price set forth on the cover of this prospectus and to some dealers who are members of the National Association of Securities Dealers, Inc. at a price that represents a concession not in excess of $ per share under the public offering price. The underwriters may allow, and these dealers may allow, a concession of not more than $ per share to brokers or other dealers. After the initial public offering, the offering price and other selling terms may be changed by the representatives. A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters and selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations. Other than the prospectus in electronic format, the information on any underwriter's or selling group member's web site and any information contained in any other web site maintained by an underwriter or selling group member is not part of this prospectus or the registration statement of which this prospectus is a part, has not been approved and/or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors. OVER-ALLOTMENT OPTION TO PURCHASE ADDITIONAL SHARES The selling shareholders have granted to the underwriters an option, exercisable not later than 30 days after the date of this prospectus, to purchase up to 1,050,000 additional shares of common stock at the initial public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus. The underwriters may exercise this option only to cover over-allotments made in connection with the sale of the common stock offered hereby. To the extent that the underwriters exercise this option, each of the underwriters will become obligated, subject to certain conditions, to purchase approximately the same percentage of additional shares of common stock as the number of shares of common stock to be purchased by it in the above table bears to 7,000,000, and the selling shareholders will be obligated, pursuant to this option, to sell these shares in proportion to their respective purchase commitments, to the underwriters to the extent this option is exercised. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the 7,000,000 shares are being offered. If this option is less than fully exercised, the underwriters will purchase shares from the selling shareholders pro rata based on the number of shares offered by each. The following table shows the fees to be paid to the underwriters by us and the selling shareholders in connection with this offering. These amounts are shown assuming both no exercise and 99 full exercise of the underwriters' option to purchase additional shares of common stock from the selling shareholders:
TOTAL FEES --------------------------- FEES PER SHARE NO EXERCISE FULL EXERCISE -------------- ----------- ------------- Payable by us............................. Payable by selling shareholders........... Total.....................................
In addition, we estimate that our share of the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately . We have agreed to indemnify the underwriters and the selling shareholders against some specified types of liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters and the selling shareholders may be required to make in respect of any of these liabilities. The representatives of the underwriters have advised us that they do not intend to confirm sales to any account over which they exercise discretionary authority. STABILIZATION, SYNDICATE SHORT POSITION AND PENALTY BIDS In connection with the offering, the representatives, on behalf of the underwriters, may purchase and sell shares of common stock in the open market. These transactions may include short sales, syndicate covering transactions and stabilizing transactions. Short sales involve syndicate sales of common stock in excess of the number of shares to be purchased by the underwriters in the offering, which create a syndicate short position. "Covered" short sales are sales of shares made in an amount up to the number of shares represented by the underwriters' over-allotment option. Transactions to close out the covered syndicate short position involve either purchases of the common stock in the open market after the distribution has been completed or the exercise of the over-allotment option. The underwriters may also make "naked" short sales of shares in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares of common stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of bids for or purchases of shares in the open market while the offering is in progress. The representatives also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the representatives in covering syndicate short positions or making stabilizing purchases, repurchase shares originally sold by that syndicate member. Any of these activities may have the effect of preventing or retarding a decline in the market price of the common stock. They may also cause the price of the common stock to be higher than the price that would otherwise exist in the open market in the absence of these activities. The underwriters may conduct these transactions on the New York Stock Exchange or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time. Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described may have on the price of the common stock. To assure the New York Stock Exchange, Inc. that the underwriters will sell shares of our common stock in connection with this offering in accordance with its distribution standards, the underwriters have represented to the New York Stock Exchange, Inc. that upon completion of this offering: (1) there will be at least 1,100,000 publicly-held shares of our common stock, (2) the aggregate market value of the publicly-held shares of our common stock will be at least $60,000,000 and (3) there will be at least 2,000 holders of 100 shares or more of our common stock. 100 Other than in the United States, neither we nor the underwriters have taken any action that would permit a public offering of the shares of common stock offered hereby in any jurisdiction where action for that purpose is required. The shares of common stock offered hereby may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such shares of common stock be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of such jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about, and to observe, any restrictions relating to the offering of the common stock and the distribution of this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy any shares of common stock offered hereby in any jurisdiction in which such an offer or solicitation is unlawful. CANADIAN OFFERS This prospectus is not, and under no circumstances is to be construed as, an advertisement or a public offering of shares in Canada or any province or territory thereof. Any offer or sale of shares in Canada will be made only under an exemption from the requirements to file a prospectus supplement or prospectus and an exemption from the dealer registration requirement in the relevant province or territory of Canada in which the offer or sale is made. LEGAL MATTERS Kramer Levin Naftalis & Frankel LLP, New York, New York, will provide us with an opinion relating to certain matters in connection with this offering. Dennis J. Reeder, Esq. will provide us with an opinion relating to matters concerning the law of the Republic of the Marshall Islands. Certain legal matters in connection with this offering will be passed upon for the underwriters by Stroock & Stroock & Lavan LLP, New York, New York. EXPERTS Our consolidated financial statements as of December 31, 2000, and for the year ended December 31, 2000, included in this prospectus and elsewhere in the registration statement have been audited by Deloitte & Touche LLP, as stated in their report appearing herein and elsewhere in the registration statement. Our consolidated financial statements as of December 31, 1999 and for the years ended December 31, 1999 and 1998, included in this prospectus and elsewhere in the registration statement have been audited by Ernst & Young LLP, as stated in their report appearing herein and elsewhere in the registration statement. We have included our consolidated financial statements in this prospectus and elsewhere in the registration statement in reliance upon the respective reports of such firms given upon their authority as experts in accounting and auditing. Both of the foregoing firms are independent auditors. In August 2000, we appointed Deloitte & Touche LLP as our certifying accountants to replace Ernst & Young LLP. This action was subsequently approved by our board of directors. During 1999 and 1998 and the subsequent interim period through August 2000, we had no disagreements with Ernst & Young LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Ernst & Young LLP, would have caused them to make reference to the subject matter of the disagreements in their report. Neither of Ernst & Young LLP's reports on our financial statements for 1999 and 1998 contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles. A letter addressed to the Securities and Exchange Commission from Ernst & Young LLP stating that they agree with the above statement is attached as an exhibit to the registration statement to which this prospectus relates. 101 WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed a registration statement on Form S-1 with the SEC with respect to the common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. For further information regarding us and our common stock, you should read the registration statement and the related exhibits and schedules. You may read and copy any document we file at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. Our SEC filings are also available to the public from the SEC's website at http://www.sec.gov. Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934 and will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC's public reference room and the SEC's website referred to above. 102 GENERAL MARITIME CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---------------- CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2001 (unaudited) AND DECEMBER 31, 2000 AND FOR THE THREE MONTHS ENDED MARCH 31, 2001 (unaudited) AND 2000 (unaudited). Consolidated Balance Sheets................................. F-2 Consolidated Statements of Operations....................... F-3 Consolidated Statement of Shareholders' Equity.............. F-4 Consolidated Statements of Cash Flows....................... F-5 Notes to Consolidated Financial Statements.................. F-6 CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2000 AND 1999, AND FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998. Report of Independent Auditors.............................. F-14 Report of Independent Auditors.............................. F-15 Consolidated Balance Sheets................................. F-16 Consolidated Statements of Operations....................... F-17 Consolidated Statement of Shareholders' Equity.............. F-18 Consolidated Statements of Cash Flows....................... F-19 Notes to Consolidated Financial Statements.................. F-20
F-1 GENERAL MARITIME CORPORATION CONSOLIDATED BALANCE SHEETS MARCH 31, 2001 (UNAUDITED) AND DECEMBER 31, 2000 (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
MARCH 31, DECEMBER 31, 2001 2000 ----------- ------------ (UNAUDITED) ASSETS CURRENT ASSETS: Cash...................................................... $ 31,581 $ 23,523 Restricted cash........................................... 44 149 Due from charterers....................................... 10,081 9,601 Prepaid expenses and other current assets................. 5,555 4,657 -------- -------- Total current assets.................................... 47,261 37,930 -------- -------- NONCURRENT ASSETS: Vessels, net of accumulated depreciation of $66,032 and $59,884, respectively................................... 386,082 392,230 Other fixed assets, net................................... 926 974 Deferred drydock costs.................................... 5,100 5,416 Deferred financing costs.................................. 1,464 1,651 Due from charterers....................................... 791 721 -------- -------- Total noncurrent assets................................. 394,363 400,992 -------- -------- TOTAL ASSETS................................................ $441,624 $438,922 -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses..................... $ 6,464 $ 6,701 Accrued interest.......................................... 1,333 2,129 Current portion of long-term debt......................... 33,400 33,050 -------- -------- Total current liabilities............................... 41,197 41,880 -------- -------- NONCURRENT LIABILITIES: Deferred voyage revenue................................... 3,606 1,397 Long-term debt............................................ 189,299 208,735 -------- -------- Total noncurrent liabilities............................ 192,905 210,132 -------- -------- Total liabilities....................................... 234,102 252,012 -------- -------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock, $.01 par value per share Authorized 75,000,000; Issued and outstanding 21,503,906 and 21,503,906 shares at March 31, 2001 and December 31, 2000, respectively......................... 215 215 Paid-in capital........................................... 157,584 157,584 Retained earnings......................................... 50,868 29,111 Accumulated other comprehensive income (loss)............. (1,145) -- -------- -------- Total shareholders' equity.............................. 207,522 186,910 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $441,624 $438,922 ======== ========
See notes to unaudited consolidated financial statements. F-2 GENERAL MARITIME CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31, 2001 (UNAUDITED) AND MARCH 31, 2000 (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
MARCH 31, MARCH 31, 2001 2000 ----------- ----------- (UNAUDITED) (UNAUDITED) VOYAGE REVENUES: Voyage revenues........................................... $ 48,042 $ 22,766 OPERATING EXPENSES: Voyage expenses........................................... 7,004 4,783 Direct vessel expenses.................................... 6,809 5,126 General and administrative expenses....................... 1,399 1,064 Depreciation and amortization............................. 6,881 5,390 ----------- ----------- Total operating expenses................................ 22,093 16,363 ----------- ----------- OPERATING INCOME............................................ 25,949 6,403 ----------- ----------- INTEREST INCOME (EXPENSE): Interest income........................................... 359 112 Interest expense.......................................... (4,551) (4,503) ----------- ----------- Net interest expense.................................... (4,192) (4,391) ----------- ----------- NET INCOME.................................................. $ 21,757 $ 2,012 =========== =========== Earning per share, basic and fully diluted.................. $ 1.01 $ 0.13 ----------- ----------- Weighted average number of shares basic and fully diluted... 21,503,906 15,805,393 =========== ===========
See notes to unaudited consolidated financial statements. F-3 GENERAL MARITIME CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE QUARTER ENDED MARCH 31, 2000 (UNAUDITED) AND AS OF DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)
ACCUMULATED OTHER COMPREHENSIVE COMMON PAID-IN RETAINED COMPREHENSIVE INCOME STOCK CAPITAL EARNINGS LOSS (LOSS) TOTAL -------- -------- -------- ------------- ------------- -------- Balance, December 31, 2000........ $ 215 $157,584 $29,111 $ -- $ -- $186,910 Comprehensive income: Net income...................... -- -- 21,757 -- 21,757 21,757 Cumulative effect of change in accounting principle (SFAS 133).......................... -- -- -- (662) (662) (662) Unrealized derivative losses on cash flow hedges.............. -- -- -- (483) (483) (483) ------- Comprehensive income.............. -- -- -- -- $20,612 -- -------- -------- ------- ------- ======= -------- Balance, March 31, 2001 (unaudited)..................... $ 215 $157,584 $50,868 $(1,145) $207,522 ======== ======== ======= ======= ========
See notes to unaudited consolidated financial statements. F-4 GENERAL MARITIME CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE QUARTERS ENDED MARCH 31, 2001 (UNAUDITED) AND MARCH 31, 2000 (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
MARCH 31, MARCH 31, 2001 2000 (UNAUDITED) (UNAUDITED) ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income................................................ $21,757 $2,012 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................... 6,881 5,390 Change in assets and liabilities: Increase in due from charterers -- current............ (480) (973) (Increase) decrease in prepaid expenses and other current assets...................................... (898) 373 (Increase) decrease in due from charterers -- noncurrent.......................................... (70) 113 Decrease in accounts payable and accrued expenses..... (1,382) (1,543) Decrease in accrued interest.......................... (796) (723) Increase in deferred voyage revenue................... 2,209 2,010 Increase in deferred drydock costs incurred........... (167) (230) ------- ------ Net cash provided by operating activities........... 27,054 6,429 ------- ------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of other fixed assets............................ (15) (25) Additions to vessels...................................... -- (174) ------- ------ Net cash used in investing activities............... (15) (199) ------- ------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt.............................. -- 459 Decrease in restricted cash............................... 105 619 Principal payments on long-term debt...................... (19,086) (5,309) Increase in deferred financing costs...................... -- (27) Change in loan with shareholder........................... -- (306) ------- ------ Net cash provided by financing activities........... (18,981) (4,564) ------- ------ NET INCREASE IN CASH........................................ 8,058 1,666 CASH, BEGINNING OF PERIOD................................... 23,523 6,842 ------- ------ CASH, END OF PERIOD......................................... $31,581 $8,508 ======= ====== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION- Cash paid for interest.................................... $ 4,842 $5,227 ======= ======
See notes to unaudited consolidated financial statements. F-5 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS--General Maritime Corporation (the "Company") is a provider of international transportation services of seaborne crude oil within the Atlantic Basin. The Company's fleet is comprised of both Aframax and Suezmax tankers. Most of the Company's vessels are currently operating in the Atlantic Basin which consists primarily of ports in the Caribbean, South and Central America, the United States, Western Africa and the North Sea. The Company operates its business in one business segment, which is the transportation of international seaborne crude oil. The Company's vessels are primarily available for charter on a voyage or time basis. Under a voyage charter, the operator of a vessel agrees to provide the vessel for the transport of specific goods between specific ports in return for the payment of an agreed upon freight per ton of cargo or, alternatively, for a specified total amount. All operating and specified voyage costs are for the owner's account. A single voyage (generally two to ten weeks) charter is often referred to as a "spot market" charter. Vessels in the spot market may also spend time idle as they await a charter. A time charter involves the placing of a vessel at the charterer's disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily or monthly hire rate. In time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. Voyage and time charters are available for varying periods, ranging from a single trip to a long-term arrangement, to commercial firms (such as oil companies) and governmental agencies (both foreign and domestic) on a worldwide basis. In general, vessels operating on time charter contracts can yield lower profit margins than vessels operating in the spot market but provide predictable cash flows and stable voyage revenues in the event of a decline in tanker rates. Vessels operating in the spot market generate revenues that are less predictable but may enable the company to capture increased profit margins during improvements in tanker rates. Ship charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand and many other factors beyond the control of the Company. RECAPITALIZATION PLAN--Prior to the Company's recapitalization, which was completed on , 2001 and is described below, 14 of the Company's vessels were owned directly or indirectly by various limited partnerships. The managing general partners of the limited partnerships were various companies wholly owned by Peter C. Georgiopoulos, Chairman and Chief Executive Officer of the Company. The commercial operations for all of these vessels were conducted by the old General Maritime Corporation, a Subchapter S Corporation also wholly owned by Peter C. Georgiopoulos. As part of the Company's recapitalization, Peter C. Georgiopoulos transferred the equity interests in the old General Maritime Corporation to the Company along with the general partnership interests in the vessel owning limited partnerships in exchange for equity interests in the Company. In addition, each vessel owner has entered into an agreement with the Company with respect to the recapitalization. Pursuant to these agreements, prior to the completion of this offering, the vessel owners will deliver the entire equity interest in each vessel to the Company. In exchange, the Company will issue each vessel owner shares of common stock of the Company. F-6 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Accordingly, the financial statements have been prepared as if the recapitalization had occurred at February 1, 1997, representing the commencement of operations of the old General Maritime Corporation. It is accounted for in a manner similar to a pooling of interests as all of the equity interests delivered in the recapitalization are under common control. The financial information included herein does not necessarily reflect the consolidated results of operations, financial position, changes in shareholders' equity and cash flows of the Company as if the Company operated as a legal consolidated entity for the years presented. For the purposes of determining the number of shares outstanding with respect to the accompanying financial statements, the Company used the mid point of the range of the initial public offering price of $18.00 per share. The number of shares outstanding will be adjusted based on the actual initial public offering price. In addition, under the terms of the Recapitalization Plan there are certain provisions, which may require a post-closing reallocation of issued shares between the respective limited partners. This adjustment and potential post-closing reallocation is not expected to result in a material change to the outstanding shares in any of the periods presented. BASIS OF PRESENTATION--The financial statements of the Company have been prepared on the accrual basis of accounting. A summary of the major accounting policies followed in the preparation of the accompanying financial statements, which conform to accounting principles generally accepted in the United States of America, is presented below. BUSINESS GEOGRAPHICS--Non-U.S. operations accounted for 100% of revenues and net income. Vessels regularly move between countries in international waters, primarily the Atlantic Basin, over hundreds of trade routes. It is therefore impractical to assign revenues or earnings from the transportation of international seaborne crude oil products by geographical area. SEGMENT REPORTING--The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. The Company does not have discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management can not and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision makers, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment. PRINCIPLES OF CONSOLIDATION--The accompanying consolidated financial statements include the accounts of General Maritime Corporation and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. REVENUE AND EXPENSE RECOGNITION--Revenue and expense recognition policies for voyage and time charter agreements are as follows: VOYAGE CHARTERS--Voyage revenues, voyage expenses and direct vessel expenses relating to voyage or spot market charters are recognized on a pro rata basis based on the relative transit time in each period. Voyage expenses primarily include only those specific costs which are borne by the Company in connection with voyage charters which would otherwise have been borne by the charterer under time charter agreements. These expenses principally consist of fuel and port F-7 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) charges. Demurrage income represents payments by the charterer to the vessel owner when loading and discharging time exceed the stipulated time in the voyage charter. Demurrage income is recognized in accordance with the provisions of the respective charter agreements and the circumstances under which demurrage claims arise. Demurrage income was not material in any of the periods presented. TIME CHARTERS--Revenue from time charters are recognized on a straight-line basis over the term of the respective time charter agreement. Direct vessel expenses are recognized when incurred. RESTRICTED CASH--Certain of the Company's subsidiaries are required to make monthly transfers into separate bank accounts to be used to pay interest and principal on their senior and junior loan facilities. VESSELS, NET--Vessels, net is stated at cost less accumulated depreciation. Vessels are depreciated on a straight-line basis over their estimated useful lives determined to be 25 years from date of initial delivery from the shipyard. Depreciation is based on cost less the estimated residual scrap value. OTHER FIXED ASSETS, NET--Other fixed assets, net is stated at cost less accumulated depreciation. The costs of significant renewals and betterments are capitalized and depreciated; expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over the following estimated useful lives:
DESCRIPTION USEFUL LIVES - ----------- ------------ Furniture, fixtures and other equipment..................... 10 years Vessel equipment............................................ 5 years Computer equipment.......................................... 4 years
RECOVERABILITY OF LONG-LIVED ASSETS--The Company evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to the carrying values or the useful lives. In evaluating useful lives and carrying values of long-lived assets, the Company reviews certain indicators of potential impairment, such as undiscounted projected cash flows, appraisals, business plans and overall market conditions. In the event that an impairment occurs, the fair value of the related asset would be determined and the Company would record a charge to operations calculated by comparing the asset's carrying value to the estimated fair value. The Company estimates fair value primarily through the use of third party valuations performed on an individual vessel basis. DEFERRED DRYDOCK COSTS--Approximately every 30 to 60 months the Company's vessels are required to be drydocked for major repairs and maintenance, which cannot be performed while the vessels are operating. The Company capitalizes drydock costs when drydocks occur and amortizes such costs ratably over the period between drydocks. Amortization of drydock costs is reported with depreciation and amortization in the statement of operations. INCOME TAXES--As noted in the description of the recapitalization plan in Note 1, the Company comprises various limited partnerships, which owned the respective vessels, and the old General F-8 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Maritime Corporation, which was a Subchapter S Corporation. As a result, no provision for federal income tax for prior years is included in the financial statements of the Company. The various limited partnerships were generally treated as partnerships for US federal income tax purposes and, accordingly, pursuant to section 701 of the Internal Revenue Code were not subject to federal income taxes. The Subchapter S Corporation was also not subject to federal income taxes: however, it was subject to various state and local taxes which were not material for any of the periods presented. The Company is a Marshall Islands corporation. Pursuant to various tax treaties and pursuant to the U.S. Internal Revenue Code, the Company does not believe its operations prospectively will be subject to income taxes in the United States. DEFERRED REVENUE--Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income in the appropriate future periods. COMPREHENSIVE INCOME--Comprehensive income is comprised of net income less charges related to the adoption of SFAS No. 133. ACCOUNTING ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. EARNINGS PER SHARE--Basic earnings/(loss) per share are computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the year. Diluted income/(loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. There were no dilutive securities outstanding during the years presented. FAIR VALUE OF FINANCIAL INSTRUMENTS--The estimated fair values of the Company's financial instruments approximate their individual carrying amounts as of December 31, 2000 and 1999 due to their short-term maturity or the variable-rate nature of the respective borrowings. RECENT ACCOUNTING PRONOUNCEMENTS--Effective January 1, 2001, the Company adopted Statement of Financial Standards ("SFAS") No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 133"), and its corresponding amendments under SFAS No. 138. SFAS 133 requires the Company to measure all derivatives, including certain derivatives embedded in other contracts, at fair value and to recognize them in the Consolidated Balance Sheet as an asset or liability, depending on the Company's rights or obligations under the applicable derivative contract. For derivatives designated as fair value hedges in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in the other comprehensive income ("OCI") and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging instruments and ineffective portions of hedges are recognized in earnings in the current period. The adoption of SFAS 133 as of January 1, 2001 did not have a material impact on the Company's results of operations or financial position. The Company recognized a charge to OCI of $662 as a result of cumulative effect in accounting change in relation to the adoption of SFAS No. 133. During the three months ended March 31, 2001, the Company F-9 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) recognized an additional charge to OCI of $483. Accordingly, the total liability in connection with the Company's cash flow hedges as of March 31, 2001 was $1,145 and is presented as a component of accounts payable and accrued expenses. INTEREST RATE RISK MANAGEMENT--The Company is exposed to the impact of interest rate changes. The Company's objective is to manage the impact of interest rate changes on earnings and cash flows of its borrowings. The Company uses interest rate swaps to manage net exposure to interest rate changes related to its borrowings and to lower its overall borrowing costs. Significant interest rate risk management instruments held by the Company during the quarter included pay-fixed swaps. Pay-fixed swaps, which expire in one to two years, effectively convert floating rate obligations to fixed rate instruments. 2. OTHER FIXED ASSETS Other fixed assets consist of the following:
MARCH 31, DECEMBER 31, 2001 2000 ----------- ------------ (UNAUDITED) Other fixed assets: Furniture, fixtures and equipment.................. $ 202 $ 197 Vessel equipment................................... 1,126 1,126 Computer equipment................................. 46 36 ----- ----- Total cost........................................... 1,374 1,359 Less accumulated depreciation........................ 448 385 ----- ----- Total................................................ $ 926 $ 974 ===== =====
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following:
MARCH 31, DECEMBER 31, 2001 2000 ----------- ------------ (UNAUDITED) Accounts payable..................................... $2,370 $2,367 Accrued expenses..................................... 1,201 1,334 Accrued time charter termination costs............... 1,748 3,000 Unrealized loss from derivatives..................... 1,145 -- ------ ------ Total................................................ $6,464 $6,701 ====== ======
F-10 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 4. LONG-TERM DEBT Long-term debt consists of the following:
MARCH 31, DECEMBER 31, 2001 2000 ----------- ------------ (UNAUDITED) Senior loans......................................... $204,351 $223,437 Junior loans......................................... 18,348 18,348 -------- -------- 222,699 241,785 Less current portion of long-term debt............... 33,400 33,050 -------- -------- Long-term debt....................................... $189,299 $208,735 ======== ========
The Company financed the acquisition of its vessels through 12 loan facilities entered into by the subsidiaries of the Company. These loan facilities are grouped in seven packages, five of which consist of both senior and junior loan facilities and two of which consist of only senior loan facilities. The senior loans are payable in quarterly or monthly installments and have balloon payments at their expirations, which are generally five years from the date of issuance. Interest rates under the senior loan facilities are adjusted quarterly and range from 1.125% to 2.0% above the London Interbank Offered Rate ("LIBOR"). The junior loan facilities are payable in a single balloon payment five years from the respective issuance date. Interest is payable quarterly at 3.0% above LIBOR. Interest rates for the three months ended March 31, 2001 ranged from 6.0% to 8.8% and from 7.9% to 10.0% under the senior and junior loan facilities, respectively. Interest rates during the three months ended March 31, 2000 ranged from 7.2% to 8.6% and 9.1% to 9.3% under the senior and junior loan facilities, respectively. Interest expense under these loan facilities was $4,487 and $4,059, for the three months ended March 31, 2001 and 2000, respectively. The Company's obligations under the loan facility agreements are secured by one or more of the following: (i) a mortgage on the vessel financed through the applicable loan facility; (ii) pledges of shares of capital stock of the subsidiaries; and (iii) a lien on some or all of the assets of the subsidiary party to the loan facility agreement. Several of the Company's loan facilities are collateralized by more than one vessel. Vessels pledged as security under the loan facility agreements had a net book value of $386,082 and $392,230 at March 31, 2001 and December 31, 2000, respectively. The loan facility agreements contain, among other things, restrictive covenants requiring minimum levels of working capital, maintenance of collateral market values and mandatory prepayments. Certain of the Company's subsidiaries are required to make monthly transfers into separate bank accounts to be used to pay interest and principal on the senior and junior loan facilities. These amounts are classified as restricted cash in the balance sheet as of March 31, 2001 and December 31, 2000. The loan facility agreements also contain, among other things, prohibitions against additional borrowings, guarantees and payments of dividends. As of December 31, 2000, the Company obtained written waivers from the respective lenders for defaults under some loan facility agreements. In addition, some of the covenants of the Company's loan facility agreements were amended to reduce working capital and other requirements. The Company does not currently expect that it will violate any of the covenants of its loan facility agreements through April 1, 2002. At December 31, 2000 the noncurrent portion of debt outstanding with respect to these F-11 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 4. LONG-TERM DEBT (CONTINUED) loan facilities is $63,498. At March 31, 2001, the Company was in compliance with all of its loan facility covenants. Aggregate maturities without any mandatory prepayments, under the loan facilities during the next five years from December 31, 2000 are the following:
YEAR ENDING DECEMBER 31, - ------------------------ 2001........................................................ $ 33,050 2002........................................................ 149,835 2003........................................................ 16,900 2004........................................................ 8,000 2005........................................................ 34,000 Thereafter.................................................. -- -------- $241,785 ========
The Company has entered into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates. The Company had outstanding ten interest rate swap agreements with foreign banks at March 31, 2001 and December 31, 2000. For the three months ended March 31, 2001 the agreements effectively fix the Company's interest rate exposure on its senior and junior loan facilities, which are based on LIBOR to fixed rates ranging from 6.2% to 7.0% for the senior loan facilities, and 6.3% to 7.0% for the junior loan facilities. The differential to be paid or received is recognized as an adjustment to interest expense as incurred. The swap agreements mature on or before the loan facilities which they hedge. The notional principal amounts of the swaps as of March 31, 2001 and December 31, 2000 are, $80,850 and $85,450, respectively. The Company would have paid approximately $1,145 and $662 to settle all outstanding swap agreements based upon their aggregate fair values as of March 31, 2001 and December 31, 2000, respectively. This fair value is based upon estimates received from financial institutions. Interest expense pertaining to interest rate swaps for the three months ended March 31, 2001 and the three months ended March 31, 2000 was $59 and $72, respectively. 5. REVENUE FROM TIME CHARTERS Total revenue earned on time charters for the three months ended March 31, 2001 and the three months ended March 31, 2000 was $14,191 and $8,911, respectively. Future minimum time charter revenue, based on vessels committed to noncancelable time charter contracts at December 31, 2000 is:
YEAR ENDING DECEMBER 31, - ------------------------ 2001........................................................ $35,641 2002........................................................ 17,889 2003........................................................ 7,928 Thereafter.................................................. -- ------- $61,458 =======
F-12 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 6. COMMITMENTS AND CONTINGENCIES The Company had contracts outstanding with Universe Tankships (Delaware) Inc. Universe Tankships (Bermuda) Inc. and United Overseas Tankers Ltd. for technical management of vessels. The remaining commitments under the contracts were approximately $274, $141 and $924, respectively, at March 31, 2001. 7. RELATED PARTY TRANSACTIONS The following are related party transactions not disclosed elsewhere in these financial statements: The Company rents office space as its principal executive offices in a building currently leased by GenMar Realty LLC, a company wholly owned by Peter C. Georgiopoulos, the Chairman and Chief Executive Officer of the Company. There is no lease agreement between the Company and GenMar Realty LLC. The Company currently pays an occupancy fee on a month to month basis. For the three months ended March 31, 2001, the Company expensed $165 for occupancy fees, of which $256 represents unpaid occupancy fees and is included in accrued expenses at March 31, 2001. Included in prepaid expenses and other current assets are net advances to the Chairman and Chief Executive Officer, Peter C. Georgiopoulos, which amounted to $486 at March 31, 2001 and December 31, 2000. ****** F-13 REPORT OF INDEPENDENT AUDITORS The accompanying financial statements give effect to the consummation of the recapitalization and legal entity reorganization plan ("the Plan") of General Maritime Corporation (the "Company"), the effect of which would result in an increase in the number of issued and authorized shares of the Company. The Plan is expected to take place prior to the commencement of the proposed offering of securities. The following report is in the form that will be furnished by Deloitte & Touche LLP upon the consummation of the aforementioned Plan and as described more fully in Note 1 under the heading "Recapitalization Plan" to the consolidated financial statements assuming that from February 27, 2001 to the date of the recapitalization and legal entity reorganization no other material events have occurred that would affect the accompanying consolidated financial statements or require disclosure therein. /s/ Deloitte & Touche LLP May 25, 2001 New York, NY To the Board of Directors and Shareholders of General Maritime Corporation New York, NY We have audited the accompanying consolidated balance sheet of General Maritime Corporation and subsidiaries as of December 31, 2000, and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of General Maritime Corporation and subsidiaries at December 31, 2000, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP New York, NY February 27, 2001, except for Note 1, as to which the date is , 2001. F-14 REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Stockholders of General Maritime Corporation We have audited the accompanying consolidated balance sheet of General Maritime Corporation as of December 31, 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the two years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of General Maritime Corporation at December 31, 1999, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Ernst & Young LLP New York, New York November 10, 2000, except for the information set forth under "Recapitalization Plan" included in Note 1, as to which the date is , 2001. The foregoing report is in the form that will be signed upon the completion of the recapitalization and legal entity reorganization described in Note 1 to the consolidated financial statements. /s/ Ernst & Young LLP New York, New York May 22, 2001 F-15 GENERAL MARITIME CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999 (Dollars in Thousands except per share data)
2000 1999 -------- -------- ASSETS CURRENT ASSETS: Cash...................................................... $ 23,523 $ 6,842 Restricted cash........................................... 149 1,388 Due from charterers....................................... 9,601 2,538 Prepaid expenses and other current assets................. 4,657 2,510 -------- -------- Total current assets.................................. 37,930 13,278 -------- -------- NONCURRENT ASSETS: Vessels, net of accumulated depreciation of $59,884 and $37,640, respectively.................... 392,230 328,974 Other fixed assets, net................................... 974 831 Deferred drydock costs.................................... 5,416 3,899 Deferred financing costs.................................. 1,651 1,302 Due from charterers....................................... 721 2,862 -------- -------- Total noncurrent assets............................... 400,992 337,868 -------- -------- TOTAL ASSETS................................................ $438,922 $351,146 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses..................... $ 6,701 $ 5,230 Accrued interest.......................................... 2,129 3,038 Current portion of long-term debt......................... 33,050 20,450 -------- -------- Total current liabilities............................. 41,880 28,718 -------- -------- NONCURRENT LIABILITIES: Deferred voyage revenue................................... 1,397 -- Note payable to shareholder............................... -- 15,000 Long-term debt............................................ 208,735 181,550 -------- -------- Total noncurrent liabilities.......................... 210,132 196,550 -------- -------- Total liabilities..................................... 252,012 225,268 -------- -------- COMMITMENTS AND CONTINGENCIES:.............................. -- -- SHAREHOLDERS' EQUITY: Common stock. $.01 par value per share Authorized 75,000,000 shares; Issued and outstanding 21,503,906 and 15,805,393 shares at December 31, 2000 and December 31, 1999, respectively..................... 215 158 Paid-in capital........................................... 157,584 126,891 Retained earnings (deficit)............................... 29,111 (1,171) -------- -------- Total shareholders' equity............................ 186,910 125,878 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $438,922 $351,146 ======== ========
See notes to consolidated financial statements. F-16 GENERAL MARITIME CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (Dollars in Thousands except per share data)
2000 1999 1998 ---------- ---------- ---------- VOYAGE REVENUES: Voyage revenues........................................ $ 132,012 $ 71,476 $ 62,031 OPERATING EXPENSES: Voyage expenses........................................ 23,996 16,742 10,247 Direct vessel expenses................................. 23,857 19,269 15,684 General and administrative expenses.................... 4,792 3,868 2,828 Depreciation and amortization.......................... 24,808 19,810 16,493 Other expenses......................................... 5,272 -- -- ---------- ---------- ---------- Total operating expenses........................... 82,725 59,689 45,252 ---------- ---------- ---------- OPERATING INCOME......................................... 49,287 11,787 16,779 ---------- ---------- ---------- INTEREST INCOME (EXPENSE): Interest income...................................... 895 456 547 Interest expense..................................... (19,900) (16,981) (15,201) ---------- ---------- ---------- Net interest expense............................... (19,005) (16,525) (14,654) ---------- ---------- ---------- NET INCOME (LOSS)........................................ $ 30,282 $ (4,738) $ 2,125 ========== ========== ========== Earning per share, basic and fully diluted............... $ 1.60 $ (0.33) $ 0.21 ========== ========== ========== Weighted average number of shares, basic and fully diluted................................................ 18,946,950 14,337,246 10,289,533
See notes to consolidated financial statements. F-17 GENERAL MARITIME CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (Dollars in Thousands except per share data)
RETAINED COMMON PAID-IN EARNINGS STOCK CAPITAL (DEFICIT) TOTAL -------- -------- --------- -------- Balance, December 31, 1997............................ $ 67 $ 54,034 $ 1,442 $ 55,543 Issuance of Common stock............................ 61 41,921 -- 41,982 Net Income.......................................... -- -- 2,125 2,125 ------- -------- ------- -------- Balance, December 31, 1998............................ $ 128 $ 95,955 $ 3,567 $ 99,650 Issuance of Common stock............................ 30 30,936 -- 30,966 Net loss............................................ -- -- (4,738) (4,738) ------- -------- ------- -------- Balance, December 31, 1999............................ $ 158 $126,891 $(1,171) $125,878 Issuance of Common stock............................ 57 15,443 15,500 Note and interest payable to shareholder contributed to equity......................................... 15,250 -- 15,250 Net income.......................................... -- -- 30,282 30,282 ------- -------- ------- -------- Balance, December 31, 2000............................ $ 215 $157,584 $29,111 $186,910 ======= ======== ======= ========
See notes to consolidated financial statements. F-18 GENERAL MARITIME CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (Dollars in Thousands)
2000 1999 1998 -------- -------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)........................................... $ 30,282 $ (4,738) $ 2,125 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............................. 24,808 19,810 16,493 Noncash interest expense contributed to capital........... 250 -- -- Change in assets and liabilities: Increase in due from charterers--current................ (7,063) (482) (1,669) Increase in prepaid expenses and other current assets... (1,661) (1,394) (254) Decrease (increase) in due from charterers--noncurrent................................ 2,141 (412) (1,776) Increase in accounts payable and accrued expenses....... 1,643 3,754 182 (Decrease) increase in accrued interest................. (909) 1,744 319 Increase (decrease) in deferred voyage revenue.......... 1,397 (1,677) 495 Increase in deferred drydock costs incurred............. (3,168) (4,074) (250) -------- -------- --------- Net cash provided by operating activities............. 47,720 12,531 15,665 -------- -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of vessels....................................... (85,500) (18,200) (158,700) Purchase of other fixed assets............................ (210) (6) (17) Additions to vessels...................................... (155) (482) (489) -------- -------- --------- Net cash used in investing activities................. (85,865) (18,688) (159,206) -------- -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt.............................. 70,458 -- 119,025 Proceeds from note payable to shareholder................. -- 15,000 -- Proceeds from issuance of common stock.................... 15,500 30,966 41,982 Decrease (increase) in restricted cash.................... 1,239 1,146 (765) Principal payments on long-term debt...................... (30,673) (39,625) (12,950) Increase in deferred financing costs...................... (1,040) (989) (673) Change in loan with shareholder........................... (658) 90 42 -------- -------- --------- Net cash provided by financing activities............. 54,826 6,588 146,661 -------- -------- --------- NET INCREASE IN CASH........................................ 16,681 431 3,120 CASH, BEGINNING OF PERIOD................................... 6,842 6,411 3,291 -------- -------- --------- CASH, END OF PERIOD......................................... $ 23,523 $ 6,842 $ 6,411 ======== ======== ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest.................................... $ 20,571 $ 15,237 $ 14,882 ======== ======== ========= SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES: Note and interest payable to shareholder contributed to equity.................................................. $ 15,250 $ -- $ -- ======== ======== =========
See notes to consolidated financial statements. F-19 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT WHERE NOTED AND FOR PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS--General Maritime Corporation (the "Company") is a provider of international transportation services of seaborne crude oil within the Atlantic Basin. The Company's fleet is comprised of both Aframax and Suezmax tankers. Most of the Company's vessels are currently operating in the Atlantic Basin which consists primarily of ports in the Caribbean, South and Central America, the United States, Western Africa and the North Sea. The Company operates its business in one business segment, which is the transportation of international seaborne crude oil. The Company's vessels are primarily available for charter on a voyage or time basis. Under a voyage charter, the operator of a vessel agrees to provide the vessel for the transport of specific goods between specific ports in return for the payment of an agreed upon freight per ton of cargo or, alternatively, for a specified total amount. All operating and specified voyage costs are for the owner's account. A single voyage (generally two to ten weeks) charter is often referred to as a "spot market" charter. Vessels in the spot market may also spend time idle as they await a charter. A time charter involves the placing of a vessel at the charterer's disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily or monthly hire rate. In time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. Voyage and time charters are available for varying periods, ranging from a single trip to a long-term arrangement, to commercial firms (such as oil companies) and governmental agencies (both foreign and domestic) on a worldwide basis. In general, vessels operating on time charter contracts can yield lower profit margins than vessels operating in the spot market but provide predictable cash flows and stable voyage revenues in the event of a decline in tanker rates. Vessels operating in the spot market generate revenues that are less predictable but may enable the company to capture increased profit margins during improvements in tanker rates. Ship charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand and many other factors beyond the control of the Company. RECAPITALIZATION PLAN--Prior to the Company's recapitalization, which was completed on , 2001 and is described below, 14 of the Company's vessels were owned directly or indirectly by various limited partnerships. The managing general partners of the limited partnerships were various companies wholly owned by Peter C. Georgiopoulos, Chairman and Chief Executive Officer of the Company. The commercial operations for all of these vessels were conducted by the old General Maritime Corporation, a Subchapter S Corporation also wholly owned by Peter C. Georgiopoulos. As part of the Company's recapitalization, Peter C. Georgiopoulos transferred the equity interests in the old General Maritime Corporation to the Company along with the general partnership interests in the vessel owning limited partnerships in exchange for equity interests in the Company. In addition, each vessel owner has entered into an agreement with the Company with respect to the recapitalization. Pursuant to these agreements, prior to the completion of this offering, the vessel owners will deliver the entire equity interest in each vessel to the Company. In exchange, the Company will issue each vessel owner shares of common stock of the Company. F-20 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Accordingly, the financial statements have been prepared as if the recapitalization had occurred at February 1, 1997, representing the commencement of operations of the old General Maritime Corporation. It is accounted for in a manner similar to a pooling of interests as all of the equity interests delivered in the recapitalization are under common control. The financial information included herein does not necessarily reflect the consolidated results of operations, financial position, changes in shareholders' equity and cash flows of the Company as if the Company operated as a legal consolidated entity for the years presented. For the purposes of determining the number of shares outstanding with respect to the accompanying financial statements, the Company used the mid point of the range of the initial public offering price of $18.00 per share. The number of shares outstanding will be adjusted based on the actual initial public offering price. In addition, under the terms of the Recapitalization Plan there are certain provisions, which may require a post-closing reallocation of issued shares between the respective limited partners. This adjustment and potential post-closing reallocation is not expected to result in a material change to the outstanding shares in any of the periods presented. BASIS OF PRESENTATION--The financial statements of the Company have been prepared on the accrual basis of accounting. A summary of the major accounting policies followed in the preparation of the accompanying financial statements, which conform to accounting principles generally accepted in the United States of America, is presented below. BUSINESS GEOGRAPHICS--Non-U.S. operations accounted for 100% of revenues and net income. Vessels regularly move between countries in international waters, primarily the Atlantic Basin, over hundreds of trade routes. It is therefore impractical to assign revenues or earnings from the transportation of international seaborne crude oil products by geographical area. SEGMENT REPORTING--The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. The Company does not have discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management can not and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision makers, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment. PRINCIPLES OF CONSOLIDATION--The accompanying consolidated financial statements include the accounts of General Maritime Corporation and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. REVENUE AND EXPENSE RECOGNITION--Revenue and expense recognition policies for voyage and time charter agreements are as follows: VOYAGE CHARTERS--Voyage revenues, voyage expenses and direct vessel expenses relating to voyage or spot market charters are recognized on a pro rata basis based on the relative transit time in each period. Voyage expenses primarily include only those specific costs which are borne by the Company in connection with voyage charters which would otherwise have been borne by the charterer under time charter agreements. These expenses principally consist of fuel and port charges. Demurrage income represents payments by the charterer to the vessel owner when F-21 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) loading and discharging time exceed the stipulated time in the voyage charter. Demurrage income is recognized in accordance with the provisions of the respective charter agreements and the circumstances under which demurrage claims arise. Demurrage income was not material in any of the periods presented. TIME CHARTERS--Revenue from time charters are recognized on a straight line basis over the term of the respective time charter agreement. Direct vessel expenses are recognized when incurred. OTHER EXPENSES--Other expenses is comprised entirely of time charterer termination costs. During the year the Company incurred costs of approximately $5,272 to terminate three time charter agreements. The Company terminated these agreements in order to charter the respective vessels on more profitable terms. No charter agreements were terminated during 1999 and 1998. RESTRICTED CASH--Certain of the Company's subsidiaries are required to make monthly transfers into separate bank accounts to be used to pay interest and principal on their senior and junior loan facilities. VESSELS, NET--Vessels, net is stated at cost less accumulated depreciation. Vessels are depreciated on a straight-line basis over their estimated useful lives determined to be 25 years from date of initial delivery from the shipyard. Depreciation is based on cost less the estimated residual scrap value. OTHER FIXED ASSETS, NET--Other fixed assets, net is stated at cost less accumulated depreciation. The costs of significant renewals and betterments are capitalized and depreciated; expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over the following estimated useful lives:
DESCRIPTION USEFUL LIVES - ----------- ------------ Furniture, fixtures and other equipment..................... 10 years Vessel equipment............................................ 5 years Computer equipment.......................................... 4 years
RECOVERABILITY OF LONG-LIVED ASSETS--The Company evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to the carrying values or the useful lives. In evaluating useful lives and carrying values of long-lived assets, the Company reviews certain indicators of potential impairment, such as undiscounted projected cash flows, appraisals, business plans and overall market conditions. In the event that an impairment occurs, the fair value of the related asset would be determined and the Company would record a charge to operations calculated by comparing the asset's carrying value to the estimated fair value. The Company estimates fair value primarily through the use of third party valuations performed on an individual vessel basis. DEFERRED DRYDOCK COSTS--Approximately every 30 to 60 months the Company's vessels are required to be drydocked for major repairs and maintenance, which cannot be performed while the vessels are operating. The Company capitalizes drydock costs when drydocks occur and amortizes such costs ratably over the period between drydocks. Amortization of drydock costs is reported with depreciation and amortization in the statement of operations. F-22 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES--As noted in the description of the recapitalization plan in Note 1, the Company comprises various limited partnerships, which owned the respective vessels, and the old General Maritime Corporation, which was a Subchapter S Corporation. As a result, no provision for federal income tax for prior years is included in the financial statements of the Company. The various limited partnerships were generally treated as partnerships for US federal income tax purposes and, accordingly, pursuant to section 701 of the Internal Revenue Code were not subject to federal income taxes. The Subchapter S Corporation was also not subject to federal income taxes; however, it was subject to various state and local taxes which were not material for any of the periods presented. The Company is a Marshall Islands corporation. Pursuant to various tax treaties and pursuant to the U.S. Internal Revenue Code, the Company does not believe its operations prospectively will be subject to income taxes in the United States. DEFERRED REVENUE--Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income in the appropriate future periods. COMPREHENSIVE INCOME--The Company has no components of comprehensive income and, as a result, comprehensive income is equal to net income for all the periods presented. ACCOUNTING ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. EARNINGS PER SHARE--Basic earnings/(loss) per share are computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the year. Diluted income/(loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. There were no dilutive securities outstanding during the years presented. FAIR VALUE OF FINANCIAL INSTRUMENTS--The estimated fair values of the Company's financial instruments approximate their individual carrying amounts as of December 31, 2000 and 1999 due to their short-term maturity or the variable-rate nature of the respective borrowings. DERIVATIVE FINANCIAL INSTRUMENTS--To manage its exposure to fluctuating interest rates, the Company uses interest rate swap agreements. Interest rate differentials to be paid or received under these agreements are accrued and recognized as an adjustment of interest expense related to the designated debt. The fair values of interest rate swap agreements and changes in fair value are not recognized in the financial statements as they qualify as hedge transactions. Amounts receivable or payable arising at the settlement of interest rate swaps are deferred and amortized as an adjustment to interest expense over the period of interest rate exposure provided the designated liability continues to exist. RECENT ACCOUNTING PRONOUNCEMENTS--Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, is effective for all fiscal years beginning after June 15, 2000. SFAS 133, as amended and interpreted, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, will be required to be recorded on the balance sheet at fair value. If the derivative is designated F-23 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) in a fair-value hedge, the changes in the fair value of the derivative and the hedged item will be recognized in earnings. If the derivative is designated in a cash-flow hedge, changes in the fair value of the derivative will be recorded in other comprehensive incomes (OCI) and will be recognized in the income statement when the hedged item affects earnings. SFAS 133 defines new requirements for designation and documentation of hedging relationships as well as ongoing effectiveness assessments in order to use hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value will be recognized in earnings. The Company expects that at January 1, 2001, it will record $0 as a cumulative transition adjustment to earnings relating to derivatives not designated as hedges prior to adoption of SFAS 133 and to derivatives designated in fair-value-type hedges prior to adopting SFAS 133, and ($662) in OCI as a cumulative transition adjustment for derivatives designated in cash flow-type hedges prior to adopting SFAS 133. In November 1999, the United States Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") 101, REVENUE RECOGNITION. This Bulletin sets forth the SEC Staff's position regarding the point at which it is appropriate for a registrant to recognize revenue. The Company has reviewed these criteria and believes its policy for revenue recognition to be in accordance with SAB 101. 2. OTHER FIXED ASSETS Other fixed assets consist of the following:
DECEMBER 31, ------------------- 2000 1999 -------- -------- Other fixed assets: Furniture, fixtures and equipment......................... $ 197 $ 2 Vessel equipment.......................................... 1,126 971 Computer equipment........................................ 36 21 ------ ---- Total cost.................................................. 1,359 994 Less accumulated depreciation............................... 385 163 ------ ---- Total....................................................... $ 974 $831 ====== ====
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following:
DECEMBER 31, ------------------- 2000 1999 -------- -------- Accounts payable............................................ $2,367 $4,430 Accrued expenses............................................ 1,334 800 Accrued time charter termination costs:..................... 3,000 -- ------ ------ Total....................................................... $6,701 $5,230 ====== ======
F-24 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 4. NOTE PAYABLE TO SHAREHOLDER In connection with the purchase of a vessel during the third quarter of 1999, one of the Company's subsidiaries entered into a loan agreement with a shareholder. The loan was evidenced by a note bearing interest at 10% and was due on March 31, 2000. Interest expense under this loan was $617 and $458 for the years ended December 31, 2000 and 1999, respectively. The loan was secured by a pledge of a vessel, which had a net book value of $17,888 at December 31, 1999. Subsequent to December 31, 1999, one of the Company's subsidiaries negotiated a new loan facility with a bank for the purchase of additional vessels. In connection with obtaining this financing, the shareholder contributed to capital the note payable of $15,000 and accrued interest of $250, which was incurred during the year ended December 31, 2000. 5. LONG-TERM DEBT Long-term debt consists of the following:
DECEMBER 31, ------------------- 2000 1999 -------- -------- Senior loans............................................ $223,437 $184,250 Junior loans............................................ 18,348 17,750 -------- -------- 241,785 202,000 Less current portion of long-term debt.................. 33,050 20,450 -------- -------- Long-term debt.......................................... $208,735 $181,550 ======== ========
The Company financed the acquisition of its vessels through 12 loan facilities entered into by the subsidiaries of the Company. These loan facilities are grouped in seven packages, five of which consist of both senior and junior loan facilities and two of which consist of only senior loan facilities. The senior loans are payable in quarterly or monthly installments and have balloon payments at their expirations, which are generally five years from the date of issuance. Interest rates under the senior loan facilities are adjusted quarterly and range from 1.125% to 2.0% above the London Interbank Offered Rate ("LIBOR"). The junior loan facilities are payable in a single balloon payment five years from the respective issuance dates. Interest is payable quarterly at 3.0% above LIBOR. Interest rates during 2000 ranged from 7.2% to 9.2% and 9.1% to 10.0% under the senior and junior loan facilities, respectively. Interest rates during 1999 ranged from 6.1% to 8.6% and from 8.0% to 9.2% under the senior and junior loan facilities, respectively. Interest rates during 1998 ranged from 6.3% to 7.7% and 8.2% to 8.9% under the senior and junior loan facilities, respectively. Interest expense under these loan facilities was $19,414, $15,404 and $14,316, the years ended December 31, 2000, 1999 and 1998, respectively. The Company's obligations under the loan facility agreements are secured by one or more of the following: (i) a mortgage on the vessel financed through the applicable loan facility; (ii) pledges of shares of capital stock of the subsidiaries; and (iii) a lien on some or all of the assets of the subsidiary party to the loan facility agreement. Several of the Company's loan facilities are collateralized by more than one vessel. Vessels pledged as security under the loan facility agreements had a net book value of $392,230 and $311,086 at December 31, 2000 and 1999, respectively. The loan facility agreements contain, among other things, restrictive covenants requiring minimum levels of working capital, maintenance of collateral market values and mandatory prepayments. Certain F-25 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. LONG-TERM DEBT (CONTINUED) of the Company's subsidiaries are required to make monthly transfers into separate bank accounts to be used to pay interest and principal on the senior and junior loan facilities. These amounts are classified as restricted cash in the balance sheet as of December 31, 2000 and 1999. The loan facility agreements also contain, among other things, prohibitions against additional borrowings, guarantees and payments of dividends. As of December 31, 2000, the Company obtained written waivers from the respective lenders for defaults under some loan facility agreements. In addition, some of the covenants of the Company's loan facility agreements were amended to reduce working capital and other requirements. The Company does not currently expect that it will violate any of the covenants of its loan facility agreements through January 1, 2002. The noncurrent portion of debt outstanding with respect to these loan facilities is $63,498. Aggregate maturities without any mandatory prepayments, under the loan facilities during the next five years from December 31, 2000 are the following:
YEAR ENDING DECEMBER 31, - ------------------------ 2001........................................................ $ 33,050 2002........................................................ 149,835 2003........................................................ 16,900 2004........................................................ 8,000 2005........................................................ 34,000 Thereafter.................................................. -- -------- $241,785 ========
The Company has entered into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates. The Company had outstanding ten interest rate swap agreements with foreign banks at December 31, 2000 and 1999. The 2000 agreements effectively fix the Company's interest rate exposure on its senior and junior loan facilities, which are based on LIBOR to fixed rates ranging from 6.2% to 7.0% for the senior loan facilities, and 6.3% to 7.0% for the junior loan facilities. The 1999 agreements effectively fix the Company's interest rate exposure on its senior and junior loan facilities, which are based on LIBOR to fixed rates ranging from 6.1% to 6.3% for the senior loan facilities, and 6.3% to 6.4% for the junior loan facilities. The differential to be paid or received is recognized as an adjustment to interest expense as incurred. The swap agreements mature on or before the loan facilities which they hedge. The changes in the notional principal amounts of the swaps of December 31, 2000 and 1999 are as follows:
DECEMBER 31, ------------------- 2000 1999 -------- -------- Notional principal amount, beginning of year............ $103,750 $122,600 Maturity of swaps....................................... 18,300 18,850 -------- -------- Notional principal amount, end of period................ $ 85,450 $103,750 ======== ========
The Company would have paid (received) approximately $662 and ($608) to settle all outstanding swap agreements based upon their aggregate fair values as of December 31, 2000 and 1999, respectively. This fair value is based upon estimates received from financial institutions. F-26 GENERAL MARITIME CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. LONG-TERM DEBT (CONTINUED) Interest income (expense) pertaining to interest rate swaps for the years ended December 31, 2000, 1999 and 1998 was $141, ($1,102) and ($867), respectively. 6. REVENUE FROM TIME CHARTERS Total revenue earned on time charters for the years ended December 31, 2000, 1999 and 1998 was $41,512, $35,230 and $36,646, respectively. Future minimum time charter revenue, based on vessels committed to noncancelable time charter contracts at December 31, 2000 is:
YEAR ENDED DECEMBER 31, - ----------------------- 2001........................................................ $35,641 2002........................................................ 17,889 2003........................................................ 7,928 Thereafter.................................................. -- ------- $61,458 =======
7. SIGNIFICANT CUSTOMERS For the year ended December 31, 2000, the Company earned approximately $19,376 and $14,902 from two customers which represented 14.7% and 11.3% of voyage revenues, respectively. For the years ended December 31, 1999, and 1998, the Company earned approximately $16,002 and $16,954, respectively, from one customer which represent 22.4% and 27.3% of voyage revenues in the respective periods. 8. COMMITMENTS AND CONTINGENCIES The Company had contracts outstanding with Universe Tankships (Delaware) Inc, Universe Tankships (Bermuda) Inc and United Overseas Tankers Ltd for technical management of vessels. The remaining commitments under the contracts were approximately $274, $137 and $1,380, respectively, at December 31, 2000. 9. RELATED PARTY TRANSACTIONS The following are related party transactions not disclosed elsewhere in these financial statements: The Company rents office space as its principal executive offices in a building currently leased by GenMar Realty LLC, a company wholly owned by Peter C. Georgiopoulos, the Chairman and Chief Executive Officer of the Company. There is no lease agreement between the Company and GenMar Realty LLC. The Company currently pays an occupancy fee on a month to month basis. For the period from April 1, 2000 to December 31, 2000, the Company expensed $495 for occupancy fees, of which $196 represents unpaid occupancy fees and is included in accounts payable at December 31, 2000. Included in prepaid expenses and other current assets are net advances to the Chairman and Chief Executive Officer, Peter C. Georgiopoulos, which amounted to $486 at December 31, 2000. Included in accounts payable are net advances from the Chairman and Chief Executive Officer, Peter C. Georgiopoulos, which amounted to $172 and $84 for the years ended December 31, 1999, and 1998, respectively. ****** F-27 7,000,000 SHARES [GENERAL MARITIME LOGO] GENERAL MARITIME CORPORATION COMMON STOCK --------------- PROSPECTUS , 2001 --------------- LEHMAN BROTHERS ABN AMRO ROTHSCHILD LLC JEFFERIES & COMPANY, INC. PART II INFORMATION NOT REQUIRED IN PROSPECTUS. ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the various expenses in connection with the sale of the common stock being registered. There are no underwriting commissions or fees in connection with the offering. All the amounts shown are estimates except for the SEC registration fee and New York Stock Exchange listing fee. SEC registration fee........................................ $ 39,848 NASD filing fee............................................. 12,000 Accounting fees and expenses................................ 1,450,000 New York Stock Exchange listing fee......................... 84,600 Legal fees and expenses..................................... 1,550,000 Printing and engraving expenses............................. 250,000 Blue Sky fees and expenses.................................. 1,000 Directors and officers' insurance........................... 900,000 Transfer agent and registrar fees and expenses.............. 5,000 Miscellaneous............................................... 207,552 ---------- Total..................................................... $3,500,000 ==========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. We are a Marshall Islands corporation. The Marshall Islands Business Corporations Act ("MIBCA") provides that Marshall Islands corporations may indemnify any of their directors or officers who are or are threatened to be a party to any legal action resulting from fulfilling their duties to the corporation against reasonable expenses, judgments and fees (including attorneys' fees) incurred in connection with such action if the director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, or its equivalent, will not create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe his conduct was unlawful. However, no indemnification will be permitted in cases where it is determined that the director or officer was liable for negligence or misconduct in the performance of his duty to the corporation, unless the court in which such action was brought determines that the person is fairly and reasonably entitled to indemnity, and then only for the expenses that the court deems proper. A corporation is permitted to advance payment for expenses occurred in defense of an action if its board of directors decides to do so. In addition, Marshall Islands corporations may purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation against any liability asserted against him and incurred by him in such capacity whether or not the corporation would have the power to indemnify him against such liability under the provisions of the MIBCA. Our articles of incorporation and bylaws provide that we will indemnify our directors and officers to the fullest extent permitted under the MIBCA. The SEC has informed us that, to the extent that indemnification for liabilities arising under U.S. federal securities laws may be permitted to directors or officers under the MIBCA or our articles of incorporation or bylaws, such indemnification is against public policy and thus unenforceable. II-1 ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. In connection with our recapitalization prior to or at the consummation of this offering, we issued shares of our common stock to equity holders of certain affiliated limited partnerships which owned 14 vessels, to the equity holders of five special purpose entities which owned five vessels, to escrow agents to hold for the owners of three vessels we have agreements to acquire after the closing of this offering and to the sole equity holder of the old General Maritime Corporation, the corporation which provided commercial management services to 19 of the vessels. These shares were issued on the basis described in the section of the prospectus entitled "Recapitalization and Acquisition," and the foregoing transactions are described in greater detail in that section. Prior to the completion of this offering, we issued options to purchase 760,000 shares of common stock at the initial public offering price per share. As of this offering, none of the options had been exercised. The issuances of the above securities were considered to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act and, in two instances, Regulation S promulgated under the Securities Act. The issuances of shares of common stock in connection with our recapitalization were considered to be exempt from registration under the Securities Act as transactions by an issuer not involving a public offering or, with respect to issuances of shares in exchange for two of the vessels we have agreements to acquire after the closing of this offering, transactions occurring outside the United States. The issuances of options to purchase shares of common stock prior to completion of this offering were considered to be exempt from registration under the Securities Act in reliance on Section 4(2). The recipients of common stock in each of these transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in these transactions. All recipients either received adequate information about us or had access, through employment or other relationships, to such information. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a)
EXHIBIT NUMBER(1) DESCRIPTION - --------- ------------------------------------------------------------ 1.1 Form of Underwriting Agreement. (2) 2.1 Plan of Recapitalization. (2) 2.2 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Ajax Limited Partnership, the limited partners of Ajax Limited Partnership, Genmar Ajax Ltd., Peter C. Georgiopoulos, Genmar Ajax Corporation and GMC Administration Ltd. (2) 2.3 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Ajax II, L.P., the limited partners of Ajax II, L.P., Ajax II LLC, Peter C. Georgiopoulos, Genmar Ajax II Corporation and GMC Administration Ltd. (2) 2.4 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Boss, L.P., the limited partners of Boss, L.P., Genmar Boss Ltd., Peter C. Georgiopoulos, Genmar Boss Corporation and GMC Administration Ltd. (2) 2.5 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., General Maritime I, L.P., the limited partners of General Maritime I, L.P., General Maritime I Corporation, Peter C. Georgiopoulos, Genmar Maritime I Corporation and GMC Administration Ltd. (2)
II-2
EXHIBIT NUMBER(1) DESCRIPTION - --------- ------------------------------------------------------------ 2.6 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., General Maritime II, L.P., the limited partners of General Maritime II, L.P., General Maritime II Corporation, Peter C. Georgiopoulos, Genmar Maritime II Corporation and GMC Administration Ltd. (2) 2.7 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Harriet, L.P., the limited partners of Harriet, L.P., General Maritime III Corporation, Peter C. Georgiopoulos, Genmar Harriet Corporation and GMC Administration Ltd. (2) 2.8 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd. and Pacific Tankship, L.P., the limited partners of Pacific Tankship, L.P., Genmar Pacific Ltd., Peter C. Georgiopoulos, Genmar Pacific Corporation and GMC Administration Ltd. (2) 2.9 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Genmar Alexandra, LLC, Genmar II, LLC, Equili Company, L.P., Equili Company, LLC, Equili Company II, L.P. and Equili Company II, LLC. (2) 2.10 Vessel Contribution Agreement, dated May 25, 2001, between General Maritime Ship Holdings Ltd. and Blystad Shipholding Inc., Liberia. (2) 2.11 Memorandum of Agreement, dated April 26, 2001, between Blystad Shipholding Inc., Liberia and General Maritime Ship Holdings Ltd. (2) 2.12 Memorandum of Agreement, dated April 26, 2001, between Blystad Shipholding Inc., Liberia and General Maritime Ship Holdings Ltd. (2) 2.13 Vessel Contribution Agreement, dated May 25, 2001, between General Maritime Ship Holdings Ltd. and KS Stavanger Prince. (2) 2.14 Memorandum of Agreement, dated May 4, 2001, between KS Stavanger Prince and General Maritime Ship Holdings Ltd. (2) 2.15 Letter Agreement, dated May 25, 2001, between General Maritime Ship Holdings Ltd. and Peter C. Georgiopoulos relating to the acquisition of the old General Maritime Corporation. (2) 3.1 Articles of Incorporation of General Maritime Corporation. (3) 3.2 Certificate of Amendment to the Articles of Incorporation of General Maritime Corporation changing the name to General Maritime Ship Holdings Ltd. (3) 3.3 Amended and Restated Articles of Incorporation of General Maritime Corporation. (4) 3.4 By-laws of General Maritime Corporation. (5) 4.1 Form of Common Stock Certificate of General Maritime Corporation. (2) 4.2 Form of Registration Rights Agreement. (2) 5.1 Opinion of Kramer Levin Naftalis & Frankel LLP regarding the validity of the common stock being issued. (6) 5.2 Opinion of Dennis J. Reeder, Esq. regarding the validity of the common stock being issued. (6) 8.1 Opinion of Kramer Levin Naftalis & Frankel LLP regarding U.S. tax matters. (6) 8.2 Opinion of Dennis J. Reeder, Esq. regarding Republic of Marshall Islands tax matters. (6) 10.1 Reserved 10.2 Senior Facility Agreement, dated May 15, 1997, between General Maritime I, L.P., Christiania Bank og KreditKasse ASA, New York Branch ("Christiania") and Union Bank of Norway ("Union Bank").
II-3
EXHIBIT NUMBER(1) DESCRIPTION - --------- ------------------------------------------------------------ 10.3 Junior Facility Agreement, dated May 15, 1997, between General Maritime I, L.P. and Christiania. 10.4 First Preferred mortgage, dated May 20, 1997, made by Alta Ltd. in favor of Christiania. 10.5 Senior Facility Agreement, dated August 6, 1997, between Nord Ltd., Christiania and Union Bank. 10.6 Junior Facility Agreement, dated August 6, 1997, between Nord Ltd. and Christiania. 10.7 First Preferred Mortgage, dated August 7, 1997, between Nord Ltd. and Christiania, as assigned and amended on September 8, 1997. 10.8 Senior Facility Agreement, dated September 30, 1997, between Harriet Ltd., Christiania and Union Bank. 10.9 Junior Facility Agreement, dated September 30, 1997, between Harriet Ltd. and Christiania. 10.10 First Preferred Mortgage, dated September 30, 1997, between Harriet Ltd. and Christiania, as assigned and amended on September 8, 1997. 10.11 First Preferred Mortgage Amendment, dated September 29, 2000, between Harriet Ltd. and Christiania. 10.12 Senior Facility Agreement, dated October 27, 1997, between Pacific Tankship Ltd., Christiania, Union Bank and Skandinaviska Enskilda Banken AB ("Skandinaviska"). 10.13 Junior Facility Agreement, dated October 27, 1997, between Pacific Tankship Ltd. and Christiania. 10.14 Senior Facility Agreement, dated October 30, 1997, among Boss Ltd., Stavanger Sun Ltd., Christiania, Union Bank and Skandinaviska. 10.15 Junior Facility Agreement, dated October 30, 1997, among Boss Ltd., Stavanger Sun Ltd. and Christiania. 10.16 Amendment Agreement, dated December 1999, relating to Senior Facility Agreement, among Boss Ltd., Stavanger Sun Ltd. and Christiania. 10.17 Amendment Agreement, dated December 1999, relating to Junior Facility Agreement, among Boss Ltd., Stavanger Sun Ltd. and Christiania. 10.18 Amendment Agreement, dated February 2000, relating to Senior Facility Agreement, Junior Facility Agreement and other documents, among Boss Ltd., Stavanger Sun Ltd., Christiania and others. 10.19 Amendment Agreement, dated March 2000, relating to Senior Facility Agreement, Junior Facility Agreement and other documents, among Boss Ltd., Stavanger Sun Ltd., Christiania and others. 10.20 First Preferred Mortgage, dated March 15, 2000, made by Stavanger Sun Ltd. in favor of Christiania. 10.21 Second Preferred Mortgage, dated March 15, 2000, made by Stavanger Sun Ltd. in favor of Christiania. 10.22 First Preferred Mortgage, dated February 17, 2000, made by Boss Ltd. in favor of Christiania. 10.23 Second Preferred Mortgage, dated February 17, 2000, made by Boss Ltd. in favor of Christiania.
II-4
EXHIBIT NUMBER(1) DESCRIPTION - --------- ------------------------------------------------------------ 10.24 Amended and Restated Credit Agreement, dated February 9, 1999, among Genmar Constantine Ltd., Genmar Agamemnon Ltd., Genmar Minotaur Ltd., Genmar Minotaur Ltd. (collectively, the "Ajax SPVs"), Ajax Limited Partnership (together with the Ajax SPVs, the "Ajax Loan Parties"), Christiania, Skandinaviska, Union Bank and De National Investeringsbank N.V. 10.25 Form of First Preferred Mortgage, dated May 15, 1998, made by each of the Ajax SPVs in favor of Christiania, as amended on February , 1999. 10.26 Share Mortgage, dated February 9, 1999, between Ajax Limited Partnership and Christiania. 10.27 Form of $300,000,000 Credit Agreement dated as of , 2001 among General Maritime Ship Holdings Ltd., Christiania and other lenders. 10.28 Reserved. 10.29 Credit Agreement, dated June , 2000, among Genmar Gabriel Ltd., Genmar Zoe Ltd., Genmar Macedon Ltd., Genmar Spartiate Ltd. (collectively, the "Ajax II SPVs"), Ajax II, L.P., Christiania, Deutsche Shiffsbank Aktiengesellschaft, Hamburghische Landesbank-Girozentrale and Vereins-Und Westbank AG. 10.30 First Preferred Ship Mortgage, dated June , 2000, made by Genmar Macedon Ltd., Genmar Spartiate Ltd. and Genmar Zoe Ltd. in favor of Christiania. 10.31 Deed of Covenants to Accompany a First Priority Statutory Mortgage of a Ship, dated June , 2000, made by Genmar Gabriel Ltd. in favor of Christiania. 10.32 Share Mortgage, dated , 2000, between Ajax II, L.P. and Christiania. 10.33 Form of General Maritime Corporation 2001 Stock Incentive Plan. (2) 10.34 Stock Purchase Agreement dated , 2001 between General Maritime Ship Holdings Ltd. and stockholders of United Projects Shipping & Financial Inc. (2) 10.35 Memorandum of Agreement dated May 7, 2001, between Scanobo Endurance Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.36 Memorandum of Agreement dated May 7, 2001, between Scanobo Trader Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.37 Memorandum of Agreement dated May 7, 2001, between Scanobo Challenger Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.38 Memorandum of Agreement dated May 7, 2001, between Scanobo Trust Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.39 Memorandum of Agreement dated May 7, 2001, between Scanobo Champion Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.40 Memorandum of Agreement dated May 7, 2001, between Scanobo Spirit Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.41 Memorandum of Agreement dated May 7, 2001, between Scanobo Star Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.42 Form of Waiver and Contribution Agreement. (2) 16.1 Letter dated November 10, 2000, from Ernst & Young LLP regarding change in Certifying Accountants. 21.1 Subsidiaries of General Maritime Corporation. (2) 23.1 Consent of Ernst & Young LLP. (2) 23.2 Consent of Deloitte & Touche LLP. (2) 23.3 Consent of Kramer Levin Naftalis & Frankel LLP (included in its opinion filed as Exhibit 5.1).
II-5
EXHIBIT NUMBER(1) DESCRIPTION - --------- ------------------------------------------------------------ 23.4 Consent of Dennis J. Reeder, Esq. (included in his opinion filed as Exhibit 5.2). 23.5 Consent of Clarkson Research Studies. (2) 24.1 Powers of Attorney (included as part of the signature page hereto).
- ------------------------ (1) Unless otherwise noted herein, each exhibit was filed with our Form S-1 filed with the Securities and Exchange Commission on November 13, 2000. (2) Filed herewith. (3) Filed with our Form S-1/A filed with the Securities and Exchange Commission on March 14, 2001. (4) Filed as Exhibit 3.1 to our Form S-1 filed with the Securities and Exchange Commission on November 13, 2000. (5) Filed as Exhibit 3.2 to our Form S-1 filed with the Securities and Exchange Commission on November 13, 2000. (6) To be filed by amendment. ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. Insofar as the indemnification for liabilities arising under the Securities Act may be permitted as to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 14, or otherwise, the registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suite or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, General Maritime Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, the State of New York, on the day of May, 2001. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ PETER C. GEORGIOPOULOS ----------------------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer
POWERS OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Peter C. Georgiopoulos and John P. Tavlarios, and each of them, with full power to act without the other, such person's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this Registration Statement, any and all amendments thereto (including post-effective amendments), any subsequent Registration Statements pursuant to Rule 424 of the Securities Act of 1933, as amended, and any amendments thereto and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- Chairman, Chief Executive /s/ PETER C. GEORGIOPOULOS Officer and Director ------------------------------------------- (Principal Executive May 25, 2001 Peter C. Georgiopoulos Officer) /s/ JOHN P. TAVLARIOS ------------------------------------------- President, Chief Operating May 25, 2001 John P. Tavlarios Officer and Director Vice President, Chief /s/ JAMES C. CHRISTODOULOU Financial Officer and ------------------------------------------- Secretary May 25, 2001 James C. Christodoulou (Principal Financial and Accounting Officer) /s/ SIR PETER G. CAZALET ------------------------------------------- Director May 25, 2001 Sir Peter G. Cazalet
II-7
SIGNATURE TITLE DATE --------- ----- ---- /s/ WILLIAM J. CRABTREE ------------------------------------------- Director May 25, 2001 William J. Crabtree /s/ REX W. HARRINGTON ------------------------------------------- Director May 25, 2001 Rex W. Harrington /s/ STEPHEN KAPLAN ------------------------------------------- Director May 25, 2001 Stephen A. Kaplan /s/ PETER S. SHAERF ------------------------------------------- Director May 25, 2001 Peter S. Shaerf
II-8 INDEX TO EXHIBITS
(A) EXHIBIT NUMBER (1) DESCRIPTION PAGE - ----------- ------------------------------------------------------------ -------- 1.1 Form of Underwriting Agreement. (2) 2.1 Plan of Recapitalization. (2) 2.2 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Ajax Limited Partnership, Genmar Ajax Ltd., the limited partners of Ajax Limited Partnership, Peter C. Georgiopoulos, Genmar Ajax Corporation and GMC Administration Ltd. (2) 2.3 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Ajax II, L.P., the limited partners of Ajax II, L.P., Ajax II LLC, Peter C. Georgiopoulos, Genmar Ajax II Corporation and GMC Administration Ltd. (2) 2.4 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Boss, L.P., the limited partners of Boss, L.P., Genmar Boss Ltd., Peter C. Georgiopoulos, Genmar Boss Corporation and GMC Administration Ltd. (2) 2.5 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., General Maritime I, L.P., the limited partners of General Maritime I, L.P., General Maritime I Corporation, Peter C. Georgiopoulos, Genmar Maritime I Corporation and GMC Administration Ltd. (2) 2.6 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., General Maritime II, L.P., the limited partners of General Maritime II, L.P., General Maritime II Corporation, Peter C. Georgiopoulos, Genmar Maritime II Corporation and GMC Administration Ltd. (2) 2.7 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Harriet, L.P., the limited partners of Harriet, L.P., General Maritime III Corporation, Peter C. Georgiopoulos, Genmar Harriet Corporation and GMC Administration Ltd. (2) 2.8 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd. and Pacific Tankship, L.P., the limited partners of Pacific Tankship, L.P., Genmar Pacific Ltd., Peter C. Georgiopoulos, Genmar Pacific Corporation and GMC Administration Ltd. (2) 2.9 Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., Genmar Alexandra, LLC, Genmar II, LLC, Equili Company, L.P., Equili Company, LLC, Equili Company II, L.P. and Equili Company II, LLC. (2) 2.10 Vessel Contribution Agreement dated May 25, 2001, among General Maritime Ship Holdings Ltd. and Blystad Shipholding Inc., Liberia. (2) 2.11 Memorandum of Agreement dated April 26, 2001, between Blystad Shipholding Inc., Liberia and General Maritime Ship Holdings Ltd. (2) 2.12 Memorandum of Agreement dated April 26, 2001, between Blystad Shipholding Inc., Liberia and General Maritime Ship Holdings Ltd. (2) 2.13 Vessel Contribution Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd. and KS Stavanger Prince. (2) 2.14 Memorandum of Agreement, dated May 4, 2001, between KS Stavanger Prince and General Maritime Ship Holdings Ltd. (2) 2.15 Letter Agreement dated May 25, 2001, between General Maritime Ship Holdings Ltd. and Peter C. Georgiopoulos relating to the acquisition of the old General Maritime Corporation. (2) 3.1 Articles of Incorporation of General Maritime Corporation. (3) 3.2 Certificate of Amendment to the Articles of Incorporation of General Maritime Corporation changing the name to General Maritime Ship Holdings Ltd. (3)
(A) EXHIBIT NUMBER (1) DESCRIPTION PAGE - ----------- ------------------------------------------------------------ -------- 3.3 Amended and Restated Articles of Incorporation of General Maritime Corporation. (4) 3.4 By-laws of General Maritime Corporation. (5) 4.1 Form of Common Stock Certificate of General Maritime Corporation. (2) 4.2 Form of Registration Rights Agreement. (2) 5.1 Opinion of Kramer Levin Naftalis & Frankel LLP regarding the validity of the common stock being issued. (6) 5.2 Opinion of Dennis J. Reeder, Esq. regarding the validity of the common stock being issued. (6) 8.1 Opinion of Kramer Levin Naftalis & Frankel LLP regarding U.S. tax matters. (6) 8.2 Opinion of Dennis J. Reeder, Esq. regarding Republic of Marshall Islands tax matters. (6) 10.1 Reserved. 10.2 Senior Facility Agreement, dated May 15, 1997, between General Maritime I, L.P., Christiania Bank og KreditKasse ASA, New York Branch ("Christiania") and Union Bank of Norway ("Union Bank"). 10.3 Junior Facility Agreement, dated May 15, 1997, between General Maritime I, L.P. and Christiania. 10.4 First Preferred mortgage, dated May 20, 1997, made by Alta Ltd. in favor of Christiania. 10.5 Senior Facility Agreement, dated August 6, 1997, between Nord Ltd., Christiania and Union Bank. 10.6 Junior Facility Agreement, dated August 6, 1997, between Nord Ltd. and Christiania. 10.7 First Preferred Mortgage, dated August 7, 1997, between Nord Ltd. and Christiania, as assigned and amended on September 8, 1997. 10.8 Senior Facility Agreement, dated September 30, 1997, between Harriet Ltd., Christiania and Union Bank. 10.9 Junior Facility Agreement, dated September 30, 1997, between Harriet Ltd. and Christiania. 10.10 First Preferred Mortgage, dated September 30, 1997, between Harriet Ltd. and Christiania, as assigned and amended on September 8, 1997. 10.11 First Preferred Mortgage Amendment, dated September 29, 2000, between Harriet Ltd. and Christiania. 10.12 Senior Facility Agreement, dated October 27, 1997, between Pacific Tankship Ltd., Christiania, Union Bank and Skandinaviska Enskilda Banken AB ("Skandinaviska"). 10.13 Junior Facility Agreement, dated October 27, 1997, between Pacific Tankship Ltd. and Christiania. 10.14 Senior Facility Agreement, dated October 30, 1997, among Boss Ltd., Stavanger Sun Ltd., Christiania, Union Bank and Skandinaviska. 10.15 Junior Facility Agreement, dated October 30, 1997, among Boss Ltd., Stavanger Sun Ltd. and Christiania. 10.16 Amendment Agreement, dated December 1999, relating to Senior Facility Agreement, among Boss Ltd., Stavanger Sun Ltd. and Christiania. 10.17 Amendment Agreement, dated December 1999, relating to Junior Facility Agreement, among Boss Ltd., Stavanger Sun Ltd. and Christiania. 10.18 Amendment Agreement, dated February 2000, relating to Senior Facility Agreement, Junior Facility Agreement and other documents, among Boss Ltd., Stavanger Sun Ltd., Christiania and others.
(A) EXHIBIT NUMBER (1) DESCRIPTION PAGE - ----------- ------------------------------------------------------------ -------- 10.19 Amendment Agreement, dated March 2000, relating to Senior Facility Agreement, Junior Facility Agreement and other documents, among Boss Ltd., Stavanger Sun Ltd., Christiania and others. 10.20 First Preferred Mortgage, dated March 15, 2000, made by Stavanger Sun Ltd. in favor of Christiania. 10.21 Second Preferred Mortgage, dated March 15, 2000, made by Stavanger Sun Ltd. in favor of Christiania. 10.22 First Preferred Mortgage, dated February 17, 2000, made by Boss Ltd. in favor of Christiania. 10.23 Second Preferred Mortgage, dated February 17, 2000, made by Boss Ltd. in favor of Christiania. 10.24 Amended and Restated Credit Agreement, dated February 9, 1999, among Genmar Constantine Ltd., Genmar Agamemnon Ltd., Genmar Minotaur Ltd., Genmar Minotaur Ltd. (collectively, the "Ajax SPVs"), Ajax Limited Partnership (together with the Ajax SPVs, the "Ajax Loan Parties"), Christiania, Skandinaviska, Union Bank and De National Investeringsbank N.V. 10.25 Form of First Preferred Mortgage, dated May 15, 1998, made by each of the Ajax SPVs in favor of Christiania, as amended on February , 1999. 10.26 Share Mortgage, dated February 9, 1999, between Ajax Limited Partnership and Christiania. 10.27 Form of $300,000,000 Credit Agreement dated as of , 2001 among General Maritime Ship Holdings Ltd., Christiania and other lenders. 10.28 Reserved. 10.29 Credit Agreement, dated June , 2000, among Genmar Gabriel Ltd., Genmar Zoe Ltd., Genmar Macedon Ltd., Genmar Spartiate Ltd. (collectively, the "Ajax II SPVs"), Ajax II, L.P., Christiania, Deutsche Shiffsbank Aktiengesellschaft, Hamburghische Landesbank-Girozentrale and Vereins-Und Westbank AG. 10.30 First Preferred Ship Mortgage, dated June , 2000, made by Genmar Macedon Ltd., Genmar Spartiate Ltd. and Genmar Zoe Ltd. in favor of Christiania. 10.31 Deed of Covenants to Accompany a First Priority Statutory Mortgage of a Ship, dated June , 2000, made by Genmar Gabriel Ltd. in favor of Christiania. 10.32 Share Mortgage dated , 2000, between Ajax II, L.P. and Christiania. 10.33 Form of General Maritime Corporation 2001 Stock Incentive Plan. (2) 10.34 Stock Purchase Agreement dated May 25, 2001 between General Maritime Ship Holdings Ltd. and United Projects Shipping & Financial Inc. (2) 10.35 Memorandum of Agreement dated May 7, 2001, between Scanobo Endurance Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.36 Memorandum of Agreement dated May 7, 2001, between Scanobo Trader Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.37 Memorandum of Agreement dated May 7, 2001, between Scanobo Challenger Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.38 Memorandum of Agreement dated May 7, 2001, between Scanobo Trust Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.39 Memorandum of Agreement dated May 7, 2001, between Scanobo Champion Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.40 Memorandum of Agreement dated May 7, 2001, between Scanobo Spirit Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.41 Memorandum of Agreement dated May 7, 2001, between Scanobo Star Shipping Corp., Monrovia and General Maritime Corporation. (2) 10.42 Form of Waiver and Contribution Agreement. (2)
(A) EXHIBIT NUMBER (1) DESCRIPTION PAGE - ----------- ------------------------------------------------------------ -------- 16.1 Letter dated November 10, 2000, from Ernst & Young LLP regarding change in Certifying Accountants. 21.1 Subsidiaries of General Maritime Corporation. (2) 23.1 Consent of Ernst & Young LLP. (2) 23.2 Consent of Deloitte & Touche LLP. (2) 23.3 Consent of Kramer Levin Naftalis & Frankel LLP (included in its opinion filed as Exhibit 5.1). 23.4 Consent of Dennis J. Reeder, Esq. (included in his opinion filed as Exhibit 5.2). 23.5 Consent of Clarkson Research Studies. (2) 24.1 Powers of Attorney (included as part of the signature page hereto).
- ------------------------ (1) Unless otherwise noted herein, each exhibit was filed with our Form S-1 filed with the Securities and Exchange Commission on November 13, 2000. (2) Filed herewith. (3) Filed with our Form S-1/A filed with the Securities and Exchange Commission on March 14, 2001. (4) Filed as Exhibit 3.1 to our Form S-1 filed with the Securities and Exchange Commission on November 13, 2000. (5) Filed as Exhibit 3.2 to our Form S-1 filed with the Securities and Exchange Commission on November 13, 2000. (6) To be filed by amendment. EX-1.1 2 a2050304zex-1_1.txt EXHIBIT 1.1 Exhibit 1.1 General Maritime Corporation 7,000,000 Shares of Common Stock (par value $0.01 per share) FORM OF UNDERWRITING AGREEMENT New York, New York May __, 2001 Lehman Brothers Inc. ABN AMRO Rothschild LLC Jefferies & Company, Inc. As Representatives of the Several Underwriters c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Ladies and Gentlemen: General Maritime Corporation, a Marshall Islands corporation (formerly named General Maritime Ship Holdings Ltd., the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to the several underwriters named in Schedule 1 hereto (the "Underwriters"), for whom Lehman Brothers Inc., ABN AMRO Rothschild LLC and Jefferies & Company, Inc. are acting as representatives (the "Representatives"), an aggregate of 7,000,000 shares (the "Firm Shares") of its common stock, par value $0.01 per share (the "Common Stock"). In addition, certain shareholders of the Company named on Schedule 2 hereto (the "Selling Shareholders") propose to grant to the Underwriters an option to purchase up to an additional 1,050,000 shares of Common Stock (the "Option Shares") to cover over-allotments, if requested by the Underwriters in accordance with Section 3(c) hereof. The Firm Shares and the Option Shares are referred to herein as the "Shares." The words "you" and "your" refer to the Representatives. 1. Representations and Warranties of the Company. The Company represents and warrants to and agrees with each of the Underwriters that: (a) The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-1 (No. 333-49814), for the registration of the Shares under the Securities Act of 1933, as amended (the "Act"). Such registration statement, including the prospectus, financial statements and schedules, exhibits and all other documents filed as a part thereof, as amended through the time of effectiveness of the registration statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to Rule 430A or Rule 434 of the Rules and Regulations of the Commission under the Act (the "Regulations"), is herein called the "Registration Statement." Any registration statement filed by the Company pursuant to Rule 462(b) under the Act is herein called the "Rule 462(b) Registration Statement", and from and after the date and time of filing of the Rule 462(b) Registration Statement the term "Registration Statement" shall include the Rule 462(b) Registration Statement. The prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) or Rule 434 filing is required, is herein called the "Prospectus." The term "preliminary prospectus" as used herein means a preliminary prospectus included in the Registration Statement at the time it is declared effective as described in Rule 430A of the Regulations; provided, however, if the Company has, with the consent of the Representatives, elected to rely upon Rule 434 under the Act, the term "Prospectus" shall mean the Company's prospectus subject to completion dated _______, 2001 (such preliminary prospectus is herein called the "Rule 434 preliminary prospectus"), together with the applicable term sheet (the "Term Sheet") prepared and filed by the Company with the Commission under Rules 434 and 424(b) under the Act and all references in this Agreement to the date of the Prospectus shall mean the date of the Term Sheet. All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the Prospectus or the Term Sheet, or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). (b) Each preliminary prospectus and the Prospectus, if filed by electronic transmission pursuant to EDGAR (except as may be permitted by Regulation S-T under the Securities Act), was identical to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of the Shares. At the time of the effectiveness of the Registration Statement or the effectiveness of any Rule 462(b) Registration Statement and any post-effective amendment thereto, when the Prospectus is first filed with the Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when any supplement to or amendment of the Prospectus is filed with the Commission and at the Closing Date (as defined in Section 3(b)) and the Additional Closing Date, if any (as defined in Section 3(c)), the Registration Statement and the Prospectus and any amendments thereof and supplements thereto complied (and, in the event of any of the aforementioned filings that may occur in the future will, at the time of such filing(s), comply) in all material respects with the applicable provisions of the Act and the Regulations, did not and will not contain an untrue statement of a material fact and did not and will not omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading (as to the Prospectus and any amendments thereof and supplements thereto, in light of the circumstances under which they were made). When any related preliminary prospectus was first filed with the Commission (whether filed as part of the Registration Statement for the registration of the Shares or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any amendment thereof or supplement thereto was first filed with the Commission, such preliminary prospectus and any amendments thereof and supplements thereto complied in all material respects with the applicable provisions of the Act and the Regulations and did not contain an untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances under which they were made. No representation and warranty is made in this subsection (b), however, with respect to any information contained in or omitted from the Registration Statement or the Prospectus or any 2 related preliminary prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information relating to the Underwriters furnished in writing to the Company by or on behalf of any Underwriter through you expressly for use in connection with the preparation thereof. The Commission has not issued any order preventing or suspending the use of any preliminary prospectus and has not instituted or, to the knowledge of the Company, threatened to institute any proceedings with respect to such an order. If Rule 434 is used, the Company will comply with the requirements of Rule 434. (c) Each of the Company and each of its direct and indirect subsidiaries (the "Subsidiaries") has been duly organized and is validly existing as a corporation, limited partnership or limited liability company in good standing under the laws of its jurisdiction of organization, with full corporate power and authority to own, lease and operate its properties and engage in the business in which it is engaged or in which it proposes to engage as described in the Registration Statement, the preliminary prospectus and the Prospectus. Each of the Company and the Subsidiaries is duly registered and qualified to do business as a foreign corporation in good standing in each jurisdiction where the character, location, ownership or leasing of its properties (owned, leased or licensed) or the nature or conduct of its business requires such registration or qualification, except where the failure to be so qualified would not, individually or in the aggregate, result in a material adverse effect on or affect the business, operations, assets, properties, condition (financial or other), stockholders' equity, prospects or results of operations of the Company and the Subsidiaries taken as a whole (a "Material Adverse Effect"). (d) Ernst & Young LLP and Deloitte & Touche LLP, the accountants who have expressed their opinion with respect to the financial statements (including the related notes and supporting schedules) of the Company filed with the Commission as a part of the Registration Statement, the preliminary prospectus and the Prospectus, are, with respect to the Company and each Subsidiary, independent public accountants as required by the Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) As of the date hereof, the Company has an authorized capitalization as set forth in the Registration Statement, the preliminary prospectus and the Prospectus and there has been no material change in its capitalization since that date, except as expressly contemplated by the Prospectus. All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws and were not issued in violation of any preemptive right, resale right, registration right, right of first refusal or similar right. The authorized and outstanding capital stock of the Company conforms to the description thereof contained in the Registration Statement and the Prospectus (and such description correctly states, in all material respects, the substance of the provisions of the instruments defining the capital stock of the Company). Except as described in the Registration Statement and the Prospectus, there are no authorized or outstanding rights (including, without limitation, preemptive rights, co-sale rights, resale rights, rights of first refusal or similar rights), warrants or options to acquire, or instruments convertible into or exercisable or exchangeable for, any share of capital stock or other equity interest or ownership interest in the Company, or any Subsidiary or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock or other equity interest or ownership interest in the Company, or any Subsidiary or any such convertible or exercisable or exchangeable securities or instruments 3 or any such rights, warrants or options, except for any such rights that have been effectively waived in writing so as not to be exercisable in connection with the registration, offer or sale of the Shares. The Shares to be issued pursuant to this Agreement will not be issued in violation of any preemptive right, co-sale right, resale right, right of first refusal or similar right. The description of the Company's stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Registration Statement, the preliminary prospectus and the Prospectus accurately and fairly present, in all material respects, the information required to be shown with respect to such plans, arrangements, options and rights. The Shares have been duly authorized for issuance and, when issued and delivered to and paid for by the Underwriters pursuant to this Agreement, will be validly issued, fully paid and nonassessable, good title to the Shares will be transferred to the Underwriters free and clear of any liens, encumbrance, security interest or claim (each a "Lien") other than any Liens placed thereon by the Underwriters and the certificates representing the Shares will be in valid and sufficient form. All the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and are owned directly or indirectly by the Company, free and clear of any Lien, other than security interests granted in connection with financing and other transactions relating to ship-owning subsidiaries of the Company ("Permitted Liens"). (f) Other than the description under the caption "Business-Legal Proceedings" in the Registration Statement, there is (i) no action, suit or proceeding or, to the knowledge of the Company, no investigation, before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, pending or, to the knowledge of the Company, threatened or contemplated, as to which the Company, or any Subsidiary is (or, to the extent threatened or contemplated, will be) a party or as to which the business, assets or property of the Company, or any Subsidiary (or, to the extent threatened or contemplated, will be) subject, (ii) no statute, rule or regulation that has been enacted, adopted or issued by any governmental agency, body or official, and (iii) no injunction, restraining order or order of any nature that has been issued by a federal or state court or foreign court of competent jurisdiction to which the Company, or any Subsidiary is or will be subject or affecting the business, assets or property of the Company or any Subsidiary, that would reasonably be expected to (in the case of clauses (i), (ii) and (iii)), individually or in the aggregate, whether or not arising from transactions in the ordinary course of business, have a Material Adverse Effect, be required to be disclosed in the Registration Statement or the Prospectus or materially and adversely affect the ability of the Company to perform its obligations under this Agreement. There are no legal or administrative proceedings concerning the Company or any Subsidiary of a character that would be required to be described in a registration statement on Form S-1 under the Act that are not described, as required, in the Registration Statement and the Prospectus. The transactions described under the caption "Recapitalization and Acquisitions" in the Prospectus have been completed in all material respects as so described. (g) The financial statements of the Company, together with the related notes thereto, which are a part of the Registration Statement, preliminary prospectus and the Prospectus, present fairly in all material respects the financial position and the results of operations, changes in stockholders' equity and changes in cash flows of the Company as of the respective dates and for the respective periods specified therein. All of such financial statements and related notes have been prepared in conformity with generally accepted accounting 4 principles applied on a consistent basis throughout the periods involved and comply as to form in all material respects with the applicable accounting requirements included in Regulation S-X under the Act. The supporting schedules, the "Summary Financial and Other Data", the "Selected Consolidated Financial and Other Data", the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial tables included in the Registration Statement, the preliminary prospectus and the Prospectus fairly present the information purported to be shown thereby at the respective dates thereof and for the respective periods covered thereby and have been presented on a basis consistent with that of the audited financial statements therein. No other financial statements or supporting schedules are required by the Act or Regulation S-X to be included therein. (h) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as described in the Prospectus there has not been (i) any loss or adverse change, or any development which would reasonably be expected to result in a loss or adverse change, in or affecting the business, properties, management, assets, prospects, stockholders' equity, operations, condition (financial or other), or results of operations of the Company and the Subsidiaries taken as a whole, (ii) any transaction entered into by the Company, or any Subsidiary, except transactions in the ordinary course of business; (iii) any obligation, direct or contingent, incurred by the Company or any Subsidiary which is material to the Company and the Subsidiaries taken as a whole, (iv) any change in the capital stock or outstanding indebtedness of the Company, or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company, which in any case described in clauses (i), (ii), (iii), (iv) or (v) above, would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under this Agreement. (i) The Company and the Subsidiaries have good title to all properties and assets described in the Registration Statement, the preliminary prospectus and the Prospectus as being owned by them, free and clear of all Liens except Permitted Liens. The Company and the Subsidiaries have valid and enforceable leases for the properties leased by them, the Company and the Subsidiaries enjoy peaceful and undisturbed possession under all such leases with such exceptions as do not materially interfere with the use thereof made by the Company and the Subsidiaries, and such leases conform in all material respects to the descriptions thereof, if any, set forth in the Registration Statement, the preliminary prospectus and the Prospectus. The Company and the Subsidiaries own, lease or otherwise have rights to use all properties and assets as are important to their respective operations as now conducted and as proposed to be conducted. (j) The Company and the Subsidiaries have all requisite corporate power and authority, and all licenses, certificates, approvals, consents, concessions, qualifications, orders, registrations, authorizations and permits from all federal, state, foreign and other governmental and regulatory agencies, bodies and authorities ("Permits") that are material to and necessary for the conduct of the business of the Company and the Subsidiaries as such business is currently conducted. The Company reasonably believes that it will be able to obtain Permits that are material to and necessary for the conduct of the business of the Company and the Subsidiaries as such business is proposed to be conducted as described in the Registration Statement and the Prospectus. All such Permits are valid and in full force and effect and there is no proceeding 5 pending or, to the best knowledge of the Company, threatened, which would reasonably be expected to cause any such Permit to be withdrawn, canceled, suspended or not renewed. The Company and the Subsidiaries are not in violation of, or in default under, and have fulfilled and performed all their obligations with respect to, such Permits, except as would not reasonably be expected to have a Material Adverse Effect. No event has occurred which allows or would allow revocation or termination of any such Permit or result in any material impairment of the rights of the holder of any such Permit. The Contracts to which the Company or any Subsidiary is a party are valid and binding agreements, enforceable against the Company or such Subsidiary in accordance with their terms, except as the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect relating to or affecting creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), and, to the best of the Company's knowledge, the other contracting party or parties thereto are not in breach or default under any of such Contracts, except in each case as would not have a Material Adverse Effect. The descriptions in the Registration Statement of Contracts and other documents are accurate in all material respects and fairly present the information required to be shown with respect thereto by the Act and the Rules and Regulations, and there are no Contracts or other documents concerning the Company or any Subsidiary of a character that would be required by the Act or the Rules and Regulations to be described in the Registration Statement or filed as exhibits to the Registration Statement which are not described or filed as required, and the exhibits which have been filed are complete and correct copies of the documents of which they purport to be copies. (k) The Company and the Subsidiaries are not (i) in violation of their respective certificates of incorporation, as amended, or other constitutive documents, as the case may be, or bylaws, as amended or (ii) in breach of or default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, franchise, joint venture, deed of trust, bond, note, lease, Permit or other agreement or instrument to which the Company or such Subsidiary is a party or by which the Company or such Subsidiary may be bound or to which any of the property or assets of the Company or such Subsidiary is subject (each a "Contract"), or in violation of any law, order, rule, regulation, writ, injunction or decree of any court or governmental agency, body or authority, except in the case of this clause (ii) for such breaches, defaults or violations that would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under this Agreement. (l) Subsequent to the most recent respective dates as of which information is given in the Prospectus (or, if the Prospectus is not in existence, the most recent preliminary prospectus), and except as expressly contemplated therein, neither the Company nor any of the Subsidiaries has incurred, other than in the ordinary course of its business, any material liabilities or obligations, direct or contingent, purchased any of its outstanding capital stock, paid or declared any dividends or other distributions on its capital stock or entered into any material transactions not in the ordinary course of business, and there has been no material change in capital stock or debt or any material adverse change in the business, properties, assets, net worth, condition (financial or other), or results of operations or prospects of the Company and the Subsidiaries taken as a whole. 6 (m) The Company and the Subsidiaries own or possess or have the unconditional right to use, or can acquire on reasonable terms, all material patents, patent applications, trademarks, service marks, trade names, licenses, copyrights and proprietary or other confidential information currently employed by them in connection with their respective businesses, and neither the Company nor any such Subsidiary has received such notice of infringement of or conflict with asserted rights of any third party with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling, or finding, would result in a Material Adverse Effect on the Company and the Subsidiaries, except as described in or contemplated by the Registration Statement, preliminary prospectus and the Prospectus. (n) The Company and the Subsidiaries have filed on a timely basis with the appropriate taxing authorities (or have received an extension for filing with respect to) all necessary federal, state and foreign income and franchise tax returns, reports and other information required to be filed by them. Each such tax return, report or other information was, when filed, accurate and complete in all material respects. The Company and the Subsidiaries have duly paid, or have made adequate charges, accruals and reserves in the financial statements for, all such taxes required to be paid by them and any other assessment, fine or penalty levied against them, for all periods as to which the tax liability of the Company or the Subsidiaries have not been finally determined. No tax deficiency has been or, to the best of the Company's knowledge, is reasonably likely to be asserted or contemplated against the Company or any Subsidiary. Neither the Company nor any Subsidiary will incur any taxes as a result of their formation and the transfer of the Subsidiaries' stock or other equity interests to the Company pursuant to the contribution agreements and recapitalization plan described in the Prospectus (or, if the Prospectus is not in existence, the most recent preliminary prospectus) or the acquisition agreement entered into with United Overseas Tankers, Ltd. except as disclosed in the Prospectus. The Company believes that from and after the Closing (i) neither the Company nor any Subsidiary will be classified as, and the Company and each Subsidiary will conduct their operations in a manner designed to avoid classification as, at any time, a "controlled foreign corporation," a "foreign personal holding company", a "passive foreign investment company", or a "personal holding company," within the meaning of Sections 957, 552, 1297 and 542, respectively, of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) neither the Company nor any Subsidiary will derive any income which is effectively connected with the conduct of a trade or business within the United States for purposes of Section 882 of the Code. (o) Except as expressly provided in the Prospectus, no Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such Subsidiary's capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary's property or assets to the Company or any other Subsidiary. (p) The Company and each Subsidiary maintain insurance of the types and in amounts which they reasonably believe to be adequate to protect against the accident-related risks involved in the conduct of their businesses and they maintain appropriate levels of environmental damage and pollution insurance coverage, consistent with standard industry practice. 7 (q) Neither the Company nor any Subsidiary is involved in any labor dispute, disturbance, lockout, slowdown or stoppage of employees, and, to the best knowledge of the Company, no such dispute or disturbance is threatened or imminent. The Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, including, but not limited to, suppliers of officers and crew to its vessels that would reasonably be expected to result in a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under this Agreement. (r) Neither the Company nor any Subsidiary has violated any foreign, federal or state law relating to discrimination in the hiring, promotion, or pay of employees, nor any applicable foreign, federal or state wages and hours law, nor any provisions of ERISA or the rules and regulations promulgated thereunder, the consequences of which violation would reasonably be expected to have a Material Adverse Effect. (s) In the ordinary course of its business, the Company (including for purposes of this paragraph any of the Company's predecessor entities) periodically reviews the effect of Environmental Laws (as defined below) on the business, operations and properties of the Company and the Subsidiaries, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties, scrapping of vessels or compliance with Environmental Laws, or any Permit, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that the Company and the Subsidiaries (i) are in compliance in all material respects with all applicable foreign, United States federal, state and local environmental laws, rules, regulations, treaties, statutes and codes relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants including petroleum, crude oil or any fraction thereof ("Environmental Laws"), (ii) have received all Permits required of them under applicable Environmental Laws to conduct their business as currently conducted, (iii) are in compliance in all material respects with all terms and conditions of any such Permit and (iv) have 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. No action, proceeding, revocation proceeding, writ, injunction or claim is pending or, to the knowledge of the Company, threatened, relating to the Environmental Laws or to the Company's or any Subsidiary's activities involving Hazardous Materials. "Hazardous Materials" means any material or substance (i) that is prohibited or regulated by any Environmental Law or (ii) that has been designated or regulated by any domestic or foreign governmental body or authority as radioactive, toxic, hazardous or otherwise a danger to health, reproduction or the environment. Neither the Company nor any Subsidiary has been named as a "potentially responsible party" under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. (t) Neither the Company nor any Subsidiary has engaged in the generation, use, manufacture, transportation or storage of any Hazardous Materials on any of the Company's or any Subsidiary's properties or former properties, except in compliance in all material respects with all applicable Environmental Laws. No Hazardous Materials have been treated or disposed of on any of the Company's or any Subsidiary's properties or on properties formerly owned or 8 leased by the Company or any Subsidiary during the time of such ownership or lease, except in compliance in all material respects with Environmental Laws. (u) No payments or inducements have been made or given, directly or indirectly, to any federal or local official or candidate for, any federal or state office in the United States or foreign offices by the Company or any Subsidiary, by any of their officers, directors, employees or agents or, to the best knowledge of the Company, by any other person in connection with any opportunity, Contract, Permit, certificate, consent, order, approval, waiver or other authorization relating to the business of the Company or any Subsidiary, except for such payments or inducements as were lawful under applicable written laws, rules and regulations. Neither the Company nor any Subsidiary, nor any director, officer, agent, employee or, to the knowledge of the Company, other person associated with or acting on behalf of the Company or any Subsidiary, (i) has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment in connection with the business of the Company or any Subsidiary. (v) Neither the Company nor any Subsidiary has any liability for any prohibited transaction (within the meaning of Section 4975(c) of the Code or Part 4 of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and neither the Company, any Subsidiary nor any other trade or business (whether or not incorporated) which together with the Company or any Subsidiary would be deemed a single employer for purposes of ERISA or the Code (an "ERISA Affiliate") has any liability for an accumulated funding deficiency (within the meaning of Section 412 of the Code or Section 302 of ERISA) or any complete or partial withdrawal liability (within the meaning of Section 4201 of ERISA), or any other liability under Title IV of ERISA that has not been satisfied in full (including any contingent liability that could have a Material Adverse Effect), with respect to any pension, profit sharing or other plan which is subject to ERISA, to which the Company, any Subsidiary or any ERISA Affiliate make or ever have made a contribution and in which any employee of the Company, any Subsidiary is or has ever been a participant. With respect to such plans, the Company and the Subsidiaries (and each ERISA Affiliate, to the extent that non-compliance could give rise to joint and several liability) are in compliance in all material respects with all applicable provisions of ERISA. Neither the Company nor any Subsidiary has any comparable liability under any foreign statute or law and the Company and the Subsidiaries are in compliance in all material respects with applicable comparable foreign laws. (w) The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization, (ii) transactions are appropriately recorded to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's general or specific authorization, (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences and (v) assets are properly accounted for and safeguarded against loss from unauthorized use. The Company has not received from its 9 independent public accountants a letter describing or been informed by them of, a substantial or material deficiency in the Company's internal accounting controls in connection with their audit of the Company's financial statements incorporated by reference in the Registration Statement, the preliminary prospectus and the Prospectus. (x) There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company or any Subsidiary to or for the benefit of any of the officers or directors or stockholders of the Company or any Subsidiary or any of the members of the families of any of them, except as disclosed in the Registration Statement and the Prospectus. (y) No consent, approval, registration, authorization, filing, qualification, Permit or order of or with any court or supervisory, regulatory, administrative or governmental agency, body or authority, arbitrator or others (including stockholders), foreign or domestic, is required in connection with the execution and delivery of this Agreement, the issuance, sale or delivery of the Shares to be issued, sold and delivered by the Company hereunder, or the consummation of any other of the transactions contemplated herein or the fulfillment of the terms hereof, except the registration under the Act of the Shares and such consents, approvals, registrations, authorizations, filings, qualifications, Permits or orders, as may be required under the state securities or "Blue Sky" laws or the bylaws and rules of the National Association of Securities Dealers, Inc. (the "NASD") or as have been obtained and which are in full force and effect in connection with the offer, purchase and distribution by the Underwriters of the Shares. (z) The execution, delivery and performance by the Company of this Agreement and the issuance and sale of the Shares and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action. Neither the issuance, offer, sale or delivery of the Shares, the execution, delivery and performance by the Company of this Agreement nor the compliance by the Company with all the provisions hereof nor the consummation of the transactions contemplated hereby (i) conflicts with or will conflict with, or constitutes or will constitute a breach or violation of or a default under (or an event that, with notice or lapse of time or both, would constitute such a breach, violation or default), or results in or will result in the imposition of a Lien upon any property or assets of the Company or any Subsidiary, under, any of the terms or provisions of the certificate of incorporation or by-laws or other organizational or constitutive documents of the Company or any Subsidiary, nor (ii) conflicts with or will conflict with or constitutes or will constitute a breach or violation of, or a default under (or an event that with notice or the lapse of time or both would constitute a default) or the loss of any material benefit under, or the termination of, or results in or will result in the creation or imposition of any Lien upon any property or assets of the Company or any Subsidiary pursuant to, any Contract, other than any conflict, breach, violation or default that would not result in a Material Adverse Effect, nor (iii) violates or conflicts with or will violate or conflict with any law, statute, rule or regulation applicable to the Company or any Subsidiary or any judgment, decree or order applicable to the Company or any Subsidiary of any court or supervisory, regulatory, administrative or governmental agency, body or authority, or arbitrator having jurisdiction over the Company or any Subsidiary or any of their respective properties or assets, other than any violation or conflict that would not result in a Material Adverse Effect. 10 (aa) The Company has full corporate power and authority to enter into this Agreement and to perform the transactions contemplated hereby. This Agreement and the transactions contemplated herein have been duly and validly authorized, executed and delivered by the Company and this Agreement constitutes the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect relating to or affecting creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law) and except to the extent that the provisions of Section 8 hereof may be limited by applicable federal or state securities laws or unenforceable as against public policy. (bb) The description of the Shares in the Registration Statement and the Prospectus is accurate in all material respects. (cc) The Company is not now, and as a result of the offer and sale of the Shares in the manner contemplated in this Agreement, the Registration Statement and the Prospectus and the application of the net proceeds of such sale as described in the section entitled "Use of Proceeds" of the Registration Statement and the Prospectus, will not be, an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"), without taking account of any exemption arising out of the number or type of holders of the Company's securities. (dd) The Company has not incurred any liability for a fee, commission, or other compensation on account of the employment of a broker or finder in connection with the transactions contemplated by this Agreement other than the discount contemplated hereby. (ee) Neither the Company nor any Subsidiary nor, to the Company's best knowledge, any of its or their officers, directors or affiliates (as defined in Rule 501(b) of Regulation D ("Regulation D") under the Act) has taken or will take, directly or indirectly, any action designed to cause or to result in or that has constituted, or might reasonably be expected to cause or result in or constitute, under the Exchange Act, or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. (ff) The Company has not distributed and will not distribute prior to the later of (A) the Additional Closing Date and (B) the completion of the distribution of the Shares by the Underwriters and dealers, any offering material (including, without limitation, content on its Website, if any, that may be deemed to be offering material) in connection with the offering and sale of the Shares other than the preliminary prospectus and the Prospectus. (gg) There are no holders of securities of the Company which by reason of the filing of the Registration Statement or otherwise in connection with the sale of the Shares contemplated hereby, have the right to request or demand that the Company register under the Act any of their securities in connection with the Registration Statement, except for any such 11 rights that have been effectively waived in writing so as not to be exercisable in connection with the registration, offer or sale of the Shares. (hh) There is no tax, duty, levy, impost, deduction, charge or withholding imposed by any political subdivision or taxing authority, domestic or foreign, by virtue of the execution, delivery, performance or enforcement, or to ensure the legality, validity or admissibility into evidence, of this Agreement, and neither is it necessary that the Shares be submitted to, or filed or recorded with, any court or other authority to ensure such legality, validity, enforceability or admissibility into evidence. There are no transfer taxes or other similar fees or charges under the laws of any jurisdiction, domestic or foreign, any political subdivision thereof, or any state, required to be paid in connection with the execution and delivery of this Agreement or the issuance and sale by the Company of the Shares. (ii) All necessary actions, authorizations, conditions and things reasonably required to be taken, given, fulfilled and done by the Company and the Subsidiaries on or prior to the date of this Agreement, have been, or on the Closing Date or the Additional Closing Date, if any, will have been taken, given, fulfilled and done in connection with (i) the issue of the Prospectus, (ii) the execution and delivery of this Agreement, (iii) the execution, delivery and issuance of the Shares, (iv) the compliance with all provisions of this Agreement to be performed or complied with by such date, and (v) the right of any holders of securities of the Company to request or demand that the Company register under the Act any of their securities in connection with the Registration Statement. (jj) The Shares have been approved for listing on the New York Stock Exchange, subject only to official notice of issuance. (kk) Except as described in the Registration Statement and the Prospectus, the Company has not sold or issued any shares of capital stock within the six month period preceding the date of the Prospectus, all of which sales and issuances were made in compliance with the Act and the Regulations. (ll) Each officer and director of the Company named under the heading "Management" in the Prospectus, and each of the stockholders of the Company (such stockholders of the Company, together with each officer and director of the Company named under the heading "Management" in the Prospectus, to be referred to individually as a "Locked-Up Party" and collectively as the "Locked-Up Parties"), has agreed to sign an agreement substantially in the form attached hereto as Exhibit A (the "Lock-up Agreements"). The Company also has provided to counsel for the Underwriters true, accurate and complete copies of all of the lock-up agreements presently in effect or effected hereby. The Company has given "no transfer" instructions to its transfer agent and registrar with respect to such securities. (mm) Since its inception, the Company has not incurred any material liability arising under or as a result of the application of the provisions of the Act. (nn) The Company meets the requirements for use of Form S-1 under the Regulations. 12 Any certificate signed by an officer of the Company and delivered to the Representatives or to counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to each Underwriter as to the matters set forth therein. 2. Representations, Warranties and Agreements of the Selling Shareholders. Each Selling Shareholder severally represents, warrants and agrees with each of the Underwriters solely with respect to itself that: (a) Such Selling Shareholder has, and immediately prior to the Additional Closing Date such Selling Shareholder will have, good and valid title to the Option Shares to be sold by such Selling Shareholder hereunder on such date, free and clear of all Liens (other than any Liens placed thereon by the Underwriters); and upon delivery of such Option Shares and payment therefor pursuant hereto, good and valid title to such Option Shares, free and clear of all Liens (other than any Liens placed thereon by the Underwriters), will pass to the several Underwriters. (b) Such Selling Shareholder has the full right, power and authority to enter into this Agreement and a Power of Attorney and Custody Agreement (the "Selling Shareholder Agreement" and, together with all other similar agreements executed by the other Selling Shareholders, the "Selling Shareholder Agreements") and to sell, transfer and deliver the Shares to be sold by such Selling Shareholder hereunder; the execution, delivery and performance of this Agreement and the Selling Shareholder Agreement by such Selling Shareholder and the consummation by such Selling Shareholder of the transactions contemplated hereby and thereby 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 or other agreement or instrument to which such Selling Shareholder is a party or by which such Selling Shareholder is bound or to which any of the property or assets of such Selling Shareholder is subject, nor will such actions result in any violation of any law, statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over such Selling Shareholder or the property or assets of such Selling Shareholder; and, except for the registration of the Option Shares under the Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act or applicable state securities or "Blue Sky" laws in connection with the purchase and distribution of the Shares by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement and the Selling Shareholder Agreement by such Selling Shareholder and the consummation by such Selling Shareholder of the transactions contemplated hereby and thereby. (c) The information with respect to such Selling Shareholder in the Registration Statement and the Prospectus, including any amendments or supplements thereto, does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. (d) Such Selling Shareholder has no actual knowledge that the representations and warranties of the Company contained in Section 1 hereof are not true and correct in all material respects, is familiar with the Registration Statement and the Prospectus (as amended or 13 supplemented) and has no actual knowledge of any material fact, condition or information not disclosed in the Registration Statement, as of the date thereof, or the Prospectus (or any amendment or supplement thereto), as of the applicable filing date, which has had or would have a Material Adverse Effect and is not prompted to sell Option Shares by any materially adverse information concerning the Company or any Subsidiary which is not set forth in the Registration Statement and the Prospectus. (e) Such Selling Shareholder has not taken and will not take, directly or indirectly, any action which is designed to or which has constituted or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. (f) Such Selling Shareholder has duly executed and delivered, in the form heretofore furnished to the Representatives, the Selling Shareholder Agreement irrevocably appointing _________ and __________, or any of them, as attorneys-in-fact (the "Attorneys-in-Fact"), and [Mellon Investor Services LLC], as custodian (the "Custodian"); the Custodian is authorized to deliver the Shares to be sold by such Selling Shareholder hereunder and to accept payment therefor; and each Attorney-in-Fact is authorized to execute and deliver this Agreement and the certificate referred to in Section 10(g), to sell, assign and transfer to the Underwriters the Shares to be sold by such Selling Shareholder hereunder, to determine the purchase price to be paid by the Underwriters to such Selling Shareholder, as provided in Section 3 hereof, to authorize the delivery of the Shares to be sold by such Selling Shareholder hereunder, to accept payment therefor and otherwise to act on behalf of such Selling Shareholder in connection with this Agreement. (g) Such Selling Shareholder has irrevocably placed in custody with the Custodian certificates, in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank with signatures guaranteed, for all of the Shares to be sold by such Selling Shareholder pursuant to this Agreement or, pursuant to the Custody Agreement, has irrevocably committed to do so prior to the Closing Date, in each case with irrevocable instructions to deliver such Shares to the Underwriter pursuant to this Agreement. (h) Neither such Selling Shareholder nor any of its affiliates directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, or has any other association with (within the meaning of Article I, Section (ee) of the By-laws of the National Association of Securities Dealers, Inc. (the "NASD")), any member firm of the NASD. 3. Purchase, Sale and Delivery of the Shares. (a) The Company agrees to issue and sell to the several Underwriters the Firm Shares upon the terms herein set forth. On the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to each Underwriter and each Underwriter, severally and not jointly, agrees to purchase from the Company, at a purchase price of $_____ per Share, the number of Firm Shares set forth opposite the respective names of the Underwriters in Schedule 1 hereto 14 plus an additional number of Firm Shares which such Underwriter may become obligated to purchase pursuant to the provisions of Section 11 hereof. (b) Payment of the purchase price for the Firm Shares and the Option Shares (if the option provided for in Section 3(c) below shall have been exercised on or before the third full business day prior to the Closing Date) shall be made at the offices of Lehman Brothers Inc., Three World Financial Center, New York, New York 10285, or at such other place as shall be agreed upon by Lehman Brothers Inc. and the Company, at 10:00 A.M. on the third full business day (as permitted under Rule 15c6-1 under the Exchange Act) (unless postponed in accordance with the provisions of Section 11 hereof) following the date of the effectiveness of the Registration Statement (or, if the Company has elected to rely upon Rule 430A of the Regulations, the third or fourth full business day (as permitted under Rule 15c6-1 under the Exchange Act) after the determination of the public offering price of the Firm Shares), or such other time not later than five business days after such date as shall be agreed upon by you and the Company (such time and date of payment and delivery being herein called the "Closing Date"); provided, however, that if the Company has not made available to the Underwriters copies of the Prospectus in such quantities and at such places requested by the Underwriters, no later than noon on the business day following the execution of this Agreement, Lehman Brothers Inc. may, in its sole discretion, postpone the Closing Date until no later than two full business days following the delivery of such copies of the Prospectus. Payment for the Firm Shares shall be made to the Company by wire transfer in immediately available funds to the order of the Company, against delivery, as provided hereof, of the Firm Shares to the Underwriters. The Company shall deliver or cause to be delivered at Lehman Brothers Inc.'s election either: (i) a credit representing the Firm Shares to an account or accounts at The Depository Trust Company, as designated by Lehman Brothers Inc. for the accounts of Lehman Brothers Inc. and the several Underwriters on the Closing Date, against the irrevocable release of a wire transfer of immediately available funds for the amounts of the purchase price there for; or (ii) certificates for the Firm Shares which shall be registered in such name or names and in such authorized denominations as Lehman Brothers Inc. may request on or before noon on the business day prior to the Closing Date. The Company will permit you to examine and package such certificates for delivery at noon on the business day prior to the Closing date. "Business day" shall mean any day other than a Saturday, Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. (c) In addition, the Selling Shareholders hereby grant to the Underwriters the option to purchase, severally and not jointly, up to 1,050,000 Option Shares, each at the same purchase price per share to be paid by the Underwriters to the Company for the Firm Shares as set forth in this Section 3, for the sole purpose of covering over-allotments in the sale of Firm Shares by the Underwriters. The maximum number of Shares to be sold by each Selling Shareholder upon exercise of such option is set forth opposite such Selling Shareholder's name on Schedule 2 hereto. This option may be exercised from time to time and at any time, in whole or in part, on or before the thirtieth day following the date of the Prospectus, by notice from Lehman Brothers Inc. to the Selling Shareholders. Such notice shall set forth the aggregate number of Option Shares as to which the option is being exercised and the date and time, as reasonably determined by Lehman Brothers Inc., when the Option Shares are to be delivered (such date and time being herein sometimes referred to as the "Additional Closing Date"); provided, however, that the 15 Additional Closing Date shall not be earlier than the Closing Date or earlier than the second full business day after the date on which the option shall have been exercised nor later than the fifth full business day after the date on which the option shall have been exercised (unless such time and date are postponed in accordance with the provisions of Section 11 hereof). Each Selling Shareholder shall deliver, or cause to be delivered at Lehman Brothers Inc.'s election either: (i) a credit representing the Option Shares to an account or accounts at The Depository Trust Company, as designated by Lehman Brothers Inc. for the accounts of Lehman Brothers Inc. and the several Underwriters on the Additional Closing Date, against the irrevocable release of a wire transfer of immediately available funds for the amount of the purchase price therefor; or (ii) certificates for the Option Shares which shall be registered in such name or names and in such authorized denominations as Lehman Brothers Inc. may request at or before noon on the business day prior to the Additional Closing Date. Each Selling Shareholder will permit you to examine and package such certificates for delivery at or before noon on the business day prior to the Additional Closing Date. The number of Option Shares to be sold to each Underwriter shall be the number which bears the same ratio to the aggregate number of Option Shares being purchased as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 11 hereof) bears to the total number of Firm Shares being purchased from the Company, subject, however, to such adjustments to eliminate any fractional shares as Lehman Brothers Inc. in its sole discretion shall make. (d) Time shall be of the essence and delivery at the time and place specified in this Agreement is a further condition to the obligations of the Underwriters. 4. Offering. It is understood that the several Underwriters propose to offer the Shares for sale to the public upon the terms set forth in the Prospectus. 5. Covenants of the Company. The Company covenants and agrees with each Underwriter that: (a) If the Registration Statement has not been declared effective at the time of the execution of this Agreement, the Company will use its best efforts to cause the Registration Statement and any amendments thereto to become effective as promptly as possible. If Rule 430A is used or the filing of the Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will file the Prospectus (properly completed if Rule 430A has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed time period and will provide evidence satisfactory to you of such timely filing. If the Company elects to rely on Rule 434, the Company will prepare and file a term sheet that complies with the requirements of Rule 434. If the Company elects to rely on Rule 462(b) under the Act, the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) under the Act prior to the time confirmations are sent or given, as specified by Rule 462(b)(2) under the Act, and shall pay the applicable fees in accordance with Rule 111 under the Act. 16 The Company will notify you immediately (and, if requested by you, will confirm such notice in writing) (i) when the Registration Statement and any amendments thereto become effective, (ii) of any request by the Commission for any amendment of or supplement to the Registration Statement, any preliminary prospectus or the Prospectus or for additional information, (iii) of the mailing or the delivery to the Commission for filing of any amendment of or supplement to the Registration Statement or the Prospectus, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of the initiation, or the threatening, of any proceedings therefor, (v) of the receipt of any comments from the Commission, and (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for that purpose. If a stop order or suspension of qualification is proposed at any time, the Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain the lifting thereof as soon as possible. The Company will not file any amendment to the Registration Statement or any amendment of or supplement to, any preliminary prospectus or the Prospectus (including the prospectus required to be filed pursuant to Rule 424(b) or Rule 434) that differs from the prospectus on file at the time of the effectiveness of the Registration Statement before or after the effective date of the Registration Statement to which you shall reasonably object in writing after being timely furnished in advance a copy thereof. (b) If at any time when a prospectus relating to the Shares is required to be delivered under the Act by an Underwriter or dealer any event shall have occurred as a result of which the Prospectus as then amended or supplemented would, in the reasonable judgment of Lehman Brothers Inc., counsel to the Underwriters or the Company, include an untrue statement of a material fact or omit to state any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it shall be necessary at any time to amend or supplement the Registration Statement or the Prospectus to comply with any law, the Company promptly will notify the Representatives and prepare and file with the Commission and furnish at its own expense to the Underwriters and dealers, an appropriate amendment or supplement (in form and substance reasonably satisfactory to Lehman Brothers Inc.) which will correct such untrue statement or omission or so that the Registration Statement, any preliminary prospectus and the Prospectus will comply with the law and will use its best efforts to have any amendment to the Registration Statement declared effective as soon as possible. If at any time during the ninety (90) day period after the Registration Statement becomes effective, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in the opinion of Lehman Brothers Inc. the market price of the Shares has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates a supplement to or amendment of the Prospectus), the Company will, after notice from Lehman Brothers Inc. advising the Company to the effect set forth above, forthwith prepare, consult with Lehman Brothers Inc. concerning the substance of and disseminate a press release or other public statement, reasonably satisfactory to Lehman Brothers Inc., responding to or commenting on such rumor, publication or event. 17 (c) As soon as practicable, but not later than 45 days after the end of its fiscal quarter in which the first anniversary date of the effective date of the Registration Statement occurs, the Company will make generally available (within the meaning of Section 11(a) of the Act) to its stockholders and to you an earnings statement or statements of the Company which will satisfy the provisions of Section 11(a) of the Act and Rule 158 of the Regulations, covering a period of at least twelve consecutive months beginning after the effective date of the Registration Statement; and will, during the period of five years from the date of the Prospectus, make generally available (within the meaning of Section 11(a) of the Act) to its stockholders as soon as practicable after the end of each fiscal year, an annual report (including a balance sheet and statements of financial condition, operations, cash flows and changes in stockholders' equity of the Company, certified by the Company's independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), consolidated summary financial information of the Company for such quarter in reasonable detail. (d) The Company will furnish without charge to you and counsel to the Underwriters three complete signed copies of the Registration Statement (including exhibits thereto), and to each other Underwriter a copy of the Registration Statement (without exhibits thereto) and, so long as, in the reasonable opinion of counsel to the Underwriters, delivery of a prospectus by an Underwriter or dealer may be required by the Act, as many copies of each preliminary prospectus and the Prospectus and any amendment or supplement thereto as you may request. (e) The Company will arrange for the qualification of the Shares for sale under the laws of such jurisdictions (both national and foreign) as Lehman Brothers Inc. may designate and will make such applications, file such documents and furnish such information as may be required for that purpose and will maintain such qualifications in effect for so long as required for the distribution of the Shares; provided, however, that in no event shall the Company be required to qualify to do business in any such jurisdiction in which it is not already qualified or to file a general consent to service of process in any jurisdiction in which it is not now so required, other than in respect of suits arising out of the offering or sale of the Shares. The Company will, from time to time, prepare and file such statements, reports and other documents, as are or may be required to continue such qualifications in effect for so long a period as Lehman Brothers Inc. may request for the distribution of the Shares. The Company will cooperate with Lehman Brothers Inc. and counsel to the Underwriters in connection with the filings required to be made by Lehman Brothers Inc. with the NASD and will pay the fee of the NASD in connection with its review of the offering of the Shares and will use its best efforts to maintain quotation of its shares on the New York Stock Exchange. (f) During the period of five years from the effective date of the Registration Statement, the Company will furnish to you and, upon request, to each of the several Underwriters, without charge, copies of, in such quantities as you or the Underwriters may request from time to time, (i) as soon as available, all reports or other communications (financial or other) furnished generally by the Company to its 18 stockholders, (ii) as soon as practicable after the end of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of the Company as of the close of such fiscal year and statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public or certified public accountants; and (iii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report filed by the Company with the Commission, the NASD, any other supervisory, regulatory, administrative or governmental agency, body or authority whether pursuant to the Exchange Act or otherwise or any national securities exchange or system on which any class of securities of the Company is listed or quoted. (g) For a period of 180 days from the date of the Prospectus (the "Lock-Up Period"), without the prior written consent of Lehman Brothers Inc., who shall consult with ABN AMRO Rothschild LLC before granting or withholding such consent, the Company and each Locked-Up Party shall not, directly or indirectly: (1) issue, offer for sale, contract to sell, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by any person at any time in the future of) any shares of Common Stock or securities convertible into, exercisable or exchangeable for, or representing the right to receive, Common Stock or sell or grant options, rights or warrants with respect to any shares of Common Stock or any of the foregoing or announce the offering of or register for sale any of the foregoing or any outstanding shares of Common Stock; provided, however, that the Company may grant options and issue and sell Common Stock pursuant to any directors' and employees' stock plan (including any employees' stock purchase plan), stock ownership plan, dividend reinvestment plan, loan agreement providing for the conversion of debt, or warrants of the Company in effect at the effective date of the Registration Statement and which are described in the Prospectus so long as none of those shares that may be issued to any Locked-Up Party may be transferred during the Lock-Up Period and the Company shall enter stop transfer instructions with its transfer agent and registrar against any such transfer (provided, however, that the foregoing shall not prohibit the Company's issuance of Common Stock in connection with the transactions described in the Registration Statement under the caption "Recapitalization and Acquisitions"); or (2) enter into any swap, repurchase agreement, pledge, transfer or other transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Common Stock or other securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise. In addition, during such period, the Company also agrees not to file any registration statement with respect to, and, except as provided in this Section 5(g), each of the executive officers, directors and certain stockholders of the Company has agreed not to make any demand for, or exercise any right with respect to, the registration of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock without the prior written consent of Lehman Brothers Inc., who shall consult with ABN AMRO Rothschild LLC before granting or withholding such consent. 19 (h) During the period when, in the opinion of counsel to the Underwriters, the delivery of a Prospectus by an Underwriter or dealer is required by the Act, the Company will comply, at its own expense, with all requirements imposed upon it by the Commission, the Act, the Regulations, the Exchange Act and the rules and regulations of the Commission promulgated thereunder, so far as necessary to permit the continuance of sales of or dealing in the Shares during such period in accordance with the provisions hereof and the Prospectus. In addition, during such period the Company shall file, on a timely basis, with the Commission and the New York Stock Exchange all reports and documents required to be filed under the Exchange Act. (i) Each of the Company and the Subsidiaries will conduct its business in compliance in all material respects with all applicable laws, rules, regulations, decisions, directives and orders. The Company will do and perform all things required or necessary to be done and performed under this Agreement by the Company on or prior to the Closing Date and to comply or cause to be satisfied, to the extent such are within its control, the conditions precedent to the several obligations of the Underwriters specified in Section 10 hereof. (j) Neither the Company nor any of its affiliates (as defined in Regulation D under the Act), will take, directly or indirectly, any action designed to cause or result in, or which constitutes or which might reasonably be expected to cause, result in, or constitute, under the Exchange Act, or otherwise, stabilization or manipulation of the price of the shares of Common Stock of the Company to facilitate the offering and distribution of the Shares or any other action prohibited by Regulation M under the Exchange Act. (k) The Company will apply the net proceeds to the Company from the offering and sale of the Shares to be sold by the Company in the manner set forth in the Prospectus under "Use of Proceeds." (l) The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Shares. (m) The Company is familiar with the Investment Company Act and the rules and regulations thereunder, and has in the past conducted its affairs, and will in the future conduct its affairs, in such a manner so as to ensure that the Company was not and will not be an "investment company" within the meaning of the Investment Company Act and the rules and regulations thereunder. (n) The Company shall obtain directors' and officers' liability insurance in the minimum amount of [$___ ] million which shall apply to the offering contemplated hereby. (o) The Company shall cause to be prepared and delivered, at its expense, within one business day from the date hereof, to the Underwriters an "electronic Prospectus" to be used by the Underwriters in connection with the offering and sale of the Shares. As used herein, the term "electronic Prospectus" means a form of Prospectus, and any amendment or supplement thereto, that meets each of the following conditions: 20 (i) it shall be encoded in an electronic format, satisfactory to you, that may be transmitted electronically by the Underwriters to offerees and purchasers of the Shares for at least during the period when, in the opinion of counsel to the Underwriters, the Prospectus is required to be delivered under the Act or the Exchange Act; (ii) it shall disclose the same information as the paper Prospectus and Prospectus filed pursuant to EDGAR, except to the extent that graphic and image material cannot be disseminated electronically, in which case such graphic and image material shall be replaced in the electronic Prospectus with a fair and accurate narrative description or tabular representation of such material, as appropriate; and (iii) it shall be in or convertible into a paper format or an electronic format, satisfactory to you, that will allow investors to store and have continuously ready access to the Prospectus at any future time, without charge to investors (other than any fee charged for subscription to the system as a whole and for on-line time). The Company hereby confirms that it has included or will include in the Prospectus filed pursuant to EDGAR or otherwise with the Commission and in the Registration Statement at the effective date of the Registration Statement an undertaking that, upon receipt of a request by an investor or his or her representative during the period when, in the opinion of counsel to the Underwriters, delivery of a Prospectus by an Underwriter or dealer may be required by the Act, the Company shall transmit or cause to be transmitted promptly, without charge, a paper copy of the Prospectus. 6. Payment of Expenses. Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company will pay, or reimburse the Representatives if paid by the Underwriters, all costs, fees and expenses incident to the performance of the obligations of the Company under this Agreement, including but not limited to costs, fees and expenses of or relating to (i) the preparation by the Company, printing and filing of the Registration Statement and exhibits to it, each preliminary prospectus, the Prospectus and any amendment or supplement to the Registration Statement or the Prospectus (including, without limitation, the fees and expenses of the Company's counsel, accountants and other advisors), (ii) the preparation and delivery of certificates representing the Shares, (iii) the preparation of this Agreement and Underwriter's Questionnaires, Underwriter's Powers of Attorney, Blue Sky Memoranda, Master Agreements Among Underwriters and Master Selling Agreements, and all other documents relating to the public offering of the Shares (including those documents supplied to the Underwriters in quantities as hereinabove stated) and furnishing (including costs of shipping and mailing) such copies of the Registration Statement, the Prospectus and any preliminary prospectus, and all exhibits, schedules, consents, certificates of experts, amendments and supplements thereto, as may be reasonably requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold, (iv) the listing of the Shares on the New York Stock Exchange, (v) any filings required to be made with, and the review by, the NASD and the fees, disbursements and other charges of the Underwriters' counsel in connection therewith, (vi) the registration or qualification (or obtaining exemptions from such registration or qualification) of the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions designated pursuant to Section 5(e), including the fees, disbursements and other charges of the Underwriters' counsel in connection therewith, and the preparation and printing of preliminary, supplemental and final Blue Sky memoranda, (vii) the issuance, transfer and delivery of the Shares to the Underwriters, 21 including any issue, transfer, stamp or other taxes payable thereon, (viii) the transfer agent or registrar for the Shares, (ix) the costs and expenses of the Underwriters incident to the preparation and undertaking of "road show" presentations to be made to prospective investors, and (x) all other fees, costs and expenses referred to in Part II of the Registration Statement. 7. Covenants of the Selling Shareholders. Each Selling Shareholder severally agrees: (a) Except as contemplated by this Agreement, for a period of 180 days from the date of the Prospectus, not to, directly or indirectly, [insert language from Lock-Up Agreement]; (b) That the Shares to be sold by such Selling Shareholder hereunder, which are represented by the certificates held in custody for such Selling Shareholder pursuant to the Selling Shareholder Agreement, is subject to the interest of the Underwriters, that the arrangements made by such Selling Shareholder for such custody are irrevocable and that the obligations of such Selling Shareholder hereunder and thereunder shall not be terminated by any act of such Selling Shareholder, by the death, disability, incompetence or incapacity of such Selling Shareholder, by operation of law or by any other event; and (c) To deliver to the Representatives prior to the Closing Date a properly completed and executed United States Treasury Department Form W-9. 8. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter, its directors, officers, employees, and agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all losses, liabilities, claims, damages, actions and expenses whatsoever, as incurred (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing, compromising or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares, as originally filed or any amendment thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact necessary in order to make statements made therein, in the light of the circumstances under which they were made, not misleading; or (iii) in whole or in part upon any inaccuracy in the representations and warranties of the Company contained herein; or (iv) in whole or in part upon any failure of the Company to perform its obligations hereunder or under law; or (v) any act or failure to act or any alleged act or failure to act by an Underwriter in connection with, or relating in any manner to, the Shares or 22 the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i), (ii), (iii) or (iv) above, provided that the Company will not be liable under this clause (v) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its bad faith or willful misconduct; and provided, however, that the Company will not be liable in any such case covered by clauses (i), (ii), (iii), (iv) or (v) above to the extent but only to the extent that any such loss, liability, claim, damage, action or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to an Underwriter furnished to the Company by or on behalf of any Underwriter through you expressly for use therein; and provided, further, that with respect to any preliminary prospectus, the foregoing indemnity in this Section 8(a) shall not inure to the benefit of any Underwriter from whom the person asserting any loss, claim, damage, liability or expense purchased Shares, or any of its directors, officers or employees or any person controlling such Underwriter, if copies of the Prospectus were timely delivered to the Underwriter and a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage, liability, action or expense. This indemnity agreement will be in addition to any liability which the Company may otherwise have, including under this Agreement. (b) The Selling Shareholders, severally in proportion to the number of Shares to be sold by each of them hereunder, shall indemnify and hold harmless each Underwriter, its directors, officers, employees and agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all losses, liabilities, claims, damages, actions and expenses whatsoever, as incurred in investigating, preparing, compromising or defending against any litigation, commenced or threatened, or any claims whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them become subject, under the Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise, insofar as such losses, liabilities, claims, damages, or expenses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares, as originally filed or any amendment thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact necessary in order to make statements made therein, in the light of the circumstances under which they were made, not misleading; or (iii) in whole or in part upon any inaccuracy in the representations and warranties of the Selling Shareholders contained herein; or (iv) in whole or in part upon any failure of the Selling Shareholders to perform their obligations hereunder or under law; or (v) any act or failure to act or any alleged act or failure to act by an Underwriter in connection with, or relating in any manner to, the Shares or the offering contemplated hereby, and which is included as part of or 23 referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i), (ii), (iii) or (iv) above, provided that the Selling Shareholders will not be liable under this clause (v) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its bad faith or willful misconduct; provided, however, that no Selling Shareholder shall be liable under this paragraph 6(b) or otherwise for any amount in excess of the net proceeds received by it (computed without deduction for any taxes on such amount) in connection with the sale of the Option Shares; provided, further, that with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, which untrue statement or omission or alleged untrue statement or omission in such preliminary prospectus was corrected in the Prospectus, the indemnity agreement contained in this paragraph 6(b) shall not inure to the benefit of any Underwriter, its directors, officers, employees and agents or controlling person to the extent that any such losses, liabilities, claims, damages, actions and expenses result from the fact that a copy of the Prospectus was not sent or given to the person asserting any such losses, liabilities, claims, damages, actions and expenses at or prior to the written confirmation of the sale of the applicable Shares to such person by such Underwriter (provided that the Company shall have complied with the provisions of Section 8(a) and (c) hereof and such Underwriter shall have been provided with the number of copies of such Prospectus requested by such Underwriter in a timely manner) and it is judicially determined that such delivery was required under the Act and was not so made. (c) Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, officers, employees and agents and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and each Selling Shareholder against any losses, liabilities, claims, damages, actions and expenses whatsoever as incurred (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares, as originally filed or any amendment thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact necessary in order to make statements made therein, in the light of the circumstances under which they were made, not misleading, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to an Underwriter furnished to the Company by or on behalf of any Underwriter through you expressly for use therein. This indemnity will be in addition to any liability which any Underwriter may otherwise have, including under this Agreement. 24 (d) Promptly after receipt by an indemnified party under subsection (a), (b) or (c) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability or obligation which it may have under this Section 8 or otherwise (i) unless the failure to notify shall result in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not in any event relieve the indemnifying party from any obligations other than the indemnification obligation provided in paragraph (a), (b) or (c) above). In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent it may elect by written notice delivered to the indemnified parties promptly after receiving the aforesaid notice from an indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified parties. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to have charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party or parties in conducting the defense of any such action or that there may be one or more legal defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses shall be borne by the indemnifying parties, it being understood, however, that the indemnifying party or parties shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (plus one firm of separate local counsel for each necessary jurisdiction, if retained by the indemnified party or parties) at any time for all such indemnified parties. An indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent; provided, however, that such consent was not unreasonably withheld. The indemnifying party agrees that it shall be liable for any settlement (including all of the indemnified party's reasonable costs, including fees and expenses of its counsel) of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent is for money damages only and includes (i) an unconditional release of such indemnified party from all liability on claims that are the subject 25 matter of such action, suit or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. Any losses, claims, damages, liabilities, expenses or actions for which an indemnified party is entitled to indemnification or contribution under this Section 8 or under Section 9 below shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred, but in all cases, no later than thirty (30) days of invoice to the indemnifying party. The parties to this Agreement hereby acknowledge that they are sophisticated business persons who were represented by counsel during the negotiations regarding the provisions hereof including, without limitation, the provisions of this Section 8 and Section 9 below and are fully informed regarding said provisions. They further acknowledge that the provisions of this Section 8 and Section 9 below fairly allocate the risks in light of the ability of the parties to investigate the Company and its business in order to assure that adequate disclosure is made in the Registration Statement, the preliminary prospectus and Prospectus as required by the Act and the Exchange Act. (e) Each of the Company and the Selling Shareholders acknowledges that the statements set forth under the caption "Underwriting" in, and in the last paragraph on the cover page of, the Prospectus constitute the only information furnished in writing relating to an Underwriter by or on behalf of any Underwriter expressly for use in the Registration Statement relating to the Shares as originally filed or in any amendment thereof, any related preliminary prospectus or the Prospectus or in any amendment thereof or supplement thereto, as the case may be. 9. Contribution. In order to provide for contribution in circumstances in which the indemnification provided for in Section 8 hereof is for any reason held to be unavailable from any indemnifying party or is insufficient to hold harmless a party indemnified thereunder, each indemnifying party shall severally contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company or the Selling Shareholders any contribution received by the Company or the Selling Shareholders from persons, other than the Underwriters, who may also be liable for contribution, including persons who control the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the Company who signed the Registration Statement and directors of the Company) as incurred to which the Company, the Selling Shareholders or one or more of the Underwriters may be subject, in such proportions as is appropriate to reflect the relative benefits received by the Company, the Selling Shareholders and the Underwriters from the offering of the Shares or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in Section 8 hereof, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company or the Selling Shareholders on the one hand and the Underwriters, severally on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant 26 equitable considerations. The relative benefits received by the Company or the Selling Shareholders on the one hand and the Underwriters, severally on the other, shall be deemed to be in the same proportion as the total proceeds from the offering of the Shares (net of underwriting discounts and commissions but before deducting expenses) received by the Company or the Selling Shareholders bears to the underwriting discounts and commissions received by the Underwriters respectively. The relative fault of the Company or the Selling Shareholders on the one hand and of the Underwriters, severally on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Selling Shareholders or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this Section 9, (i) in no case shall any Underwriter be liable or responsible for any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter hereunder, (ii) no Selling Shareholder shall be required to contribute any amount in excess of the amount by which the total net proceeds received by it (computed without deduction of any taxes on such amount) from the sale of the Option Shares owned by such Selling Shareholder exceeds the amount of any damages which such Selling Shareholder has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission, and (iii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Further notwithstanding the provisions of this Section 9 and the preceding sentence, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. For purposes of this Section 9, (A) each director, officer, employee and agent of an Underwriter and each person, if any, who controls an Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Underwriter, (B) each director, officer, employee and agent of the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Company, and (C) each director, officer, employee and agent of a Selling Shareholder and each person, if any, who controls a Selling Shareholder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Selling Shareholder, subject in each case to clauses (i) and (ii) of this Section 9. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties, notify each party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 9 or otherwise. No party shall be liable for contribution with 27 respect to any action or claim settled without its consent, provided that such consent was not unreasonably withheld. The Underwriters' obligations in this Section 9 to contribute are several in proportion to their respective underwriting obligations and not joint. The remedies provided for in this Section 9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. 10. Conditions to the Obligations of the Underwriters. The several obligations of the Underwriters to purchase and pay for the Firm Shares and the Option Shares, as provided herein, shall be subject to the accuracy of the representations and warranties on the part of the Company and the Selling Shareholders contained herein as of the date hereof, the Closing Date and any Additional Closing Date, to the absence from any certificates, opinions, written statements or letters furnished to you or to Underwriters' counsel pursuant to this Section 10 of any misstatement or omission, to the timely performance by the Company and the Selling Shareholders of their respective covenants and other obligations hereunder and to each of the following additional conditions: (a) The Registration Statement shall have become effective not later than, if pricing pursuant to Rule 430A, 5:30 P.M., New York time on the date of this Agreement, and if pricing pursuant to a pricing amendment, 12:00 P.M., New York time on the date an amendment to the Registration Statement containing the public offering price has been filed with the Commission, or at such later time and date as shall have been consented to in writing by Lehman Brothers Inc., if the Company shall have elected to rely upon Rule 430A or Rule 434 of the Regulations, the Prospectus shall have been filed with the Commission in a timely fashion in accordance with Section 5(a) hereof; and, at or prior to the Closing Date no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereof shall have been issued and no proceedings for such purpose shall have been initiated or threatened by the Commission; no order suspending the qualification or registration of the Shares under the securities or Blue Sky laws of any jurisdiction shall be in effect and no proceeding for such purpose shall be pending before or threatened or contemplated by the authorities of any such jurisdiction; any request for additional information on the part of the staff of the Commission or any such authorities shall have been complied with to the satisfaction of the staff of the Commission or such authorities and to the satisfaction of counsel to the Underwriters; after the date hereof no amendment or supplement to the Registration Statement or the Prospectus shall have been filed unless a copy thereof was first submitted to you and you did not reasonably object thereto; and the NASD, upon review of the terms of the public offering of the Shares, shall not have raised any objection to the fairness or reasonableness of the underwriting terms and arrangements. (b) The Company shall have furnished to you the opinion of Kramer Levin Naftalis & Frankel LLP, counsel for the Company and, on matters of Marshall Islands law, the opinion of Dennis J. Reeder, Esq., a Marshall Islands counsel for the Company, both dated the Closing Date and the Additional Closing Date, if applicable, addressed to the Underwriters and in form and substance reasonably satisfactory to Stroock & Stroock & Lavan LLP, Underwriters' counsel, to the effect set forth in Annex A hereto. 28 (c) The Company shall have furnished to you the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Selling Shareholders, dated the Closing Date and the Additional Closing Date, if applicable, addressed to the Underwriters and in form and substance reasonably satisfactory to Stroock & Stroock & Lavan LLP, Underwriters' counsel, to the effect set forth in Annex B hereto. (d) The Company shall have furnished to you the opinion of Boxall, Cayman Islands counsel for the Company, dated the Closing Date and the Additional Closing Date, if applicable, addressed to the Underwriters and in form and substance reasonably satisfactory to Stroock & Stroock & Lavan LLP, Underwriters' counsel, to the effect set forth in Annex C hereto. (e) All corporate proceedings and other legal matters in connection with this Agreement, the Selling Shareholder Agreements, the form of Registration Statement, preliminary prospectus or Prospectus, and the registration, authorization, issue, sale and delivery of the Shares as herein contemplated shall be satisfactory in form and substance to you and to Underwriters' counsel in your and your counsel's reasonable discretion. The Underwriters shall have received from Stroock & Stroock & Lavan LLP, Underwriters' counsel, a favorable opinion, dated the Closing Date (and the Additional Closing Date, if applicable), with respect to the issuance and sale of the Shares, the Registration Statement, the Prospectus and other related matters as you may reasonably require, and the Company, the Subsidiaries and the Selling Shareholders shall have furnished to Underwriters' counsel such documents as they reasonably request for the purpose of enabling them to pass upon the matters referred to in this Section. (f) At the Closing Date (and the Additional Closing Date, if applicable) you shall have received a certificate of the Chief Executive Officer and Chief Financial Officer of the Company, on behalf of the Company, dated the Closing Date (and the Additional Closing Date, if applicable), to the effect that (i) the condition set forth in subsection (a) of this Section 10 has been satisfied, (ii) as of the date hereof and as of the Closing Date (and the Additional Closing Date, if applicable) all the representations and warranties of the Company set forth in this Agreement are accurate with the same force and effect as if made on each of such dates, (iii) as of the Closing Date (and the Additional Closing Date, if applicable) the agreements and obligations of the Company to be performed hereunder on or prior thereto have been duly performed, (iv) when the Registration Statement became effective and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement and the Prospectus, and any amendments or supplements thereto, contained the information required to be included therein by the Act and the applicable rules and regulations of the Commission thereunder, and conformed to the requirements of the Act and the applicable rules and regulations of the Commission thereunder; the Registration Statement and the Prospectus, and any amendments or supplements thereto, did not and do not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been so set forth; and (v) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company and the Subsidiaries have not sustained any material loss or interference with their respective business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor 29 dispute or any legal or governmental proceeding, and there has not been any material adverse change, or any development involving a prospective material adverse change, in the business, management, properties, operations, prospects, condition (financial or otherwise), or results of operations of the Company and the Subsidiaries taken as a whole, or any transaction that is material to the Company and the Subsidiaries taken as a whole, except transactions entered into in the ordinary course of business, or any obligation, direct or contingent, that is material to the Company and the Subsidiaries, taken as a whole, incurred by the Company or the Subsidiaries, except obligations incurred in the ordinary course of business, or any change in the capital stock or outstanding indebtedness of the Company or any of the Subsidiaries that is material to the Company and the Subsidiaries, taken as a whole, or any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any of the Subsidiaries. (g) Each Selling Shareholder (or one or more Attorneys-in-Fact on behalf of such Selling Shareholder) shall have furnished to the Representatives on the Additional Closing Date a certificate, signed by or on behalf of such Selling Shareholder stating that the representations, warranties and agreements of such Selling Shareholder are true and correct in all material respects and that such Selling Shareholder has complied with all agreements contained herein to be performed by such Selling Shareholder at or prior to the Additional Closing Date. (h) At the time that this Agreement is executed by the Company, the Underwriters shall have received from each of Ernst & Young LLP and Deloitte & Touche LLP a letter dated as of the date this Agreement is executed by the Company in form and substance satisfactory to you (the "Original Letters"), and on the Closing Date (and the Additional Closing Date, if any) the Underwriters shall have received from each of such firms a letter dated the Closing Date (or the Additional Closing Date, as the case may be) stating that, as of a specified date not earlier than five (5) days prior to the Closing Date or the Additional Closing Date, as the case may be, nothing has come to its attention to suggest that the statements made in its Original Letter are not true and correct. In addition, Lehman Brothers Inc. shall have received from Deloitte & Touche LLP a letter addressed to the Company and made available to you for the use of the Underwriters stating that their review of the Company's system of internal accounting controls, to the extent they deemed necessary in establishing the scope of their examination of the Company's consolidated financial statements as of March 31, 2001, did not disclose any weaknesses in internal controls that they considered to be substantial or material weaknesses. In the event that the letters to be delivered referred to above set forth note any changes, decreases or increases in the financial information included in the Registration Statement and the Prospectus, it shall be a further condition to the obligations of the Underwriters hereunder that Lehman Brothers Inc. shall have determined in its sole judgment, that such changes, decreases or increases as are set forth in such letters do not reflect a material adverse change in the stockholders' equity or long-term debt of the Company as compared with the amounts shown in the latest balance sheet of the Company included in the Prospectus, or a material adverse change in total net revenues or net income of the Company, in each case as compared with the corresponding period of the prior year. 30 (i) Subsequent to the date this Agreement is executed or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (h) of this Section 10 or (ii) any change, or any development involving a prospective change, in or affecting the condition (financial or other), earnings, business or properties of the Company and the Subsidiaries, whether or not arising in the ordinary course of business, the effect of which, in any case referred to in clause (i) or (ii) above, is, in Lehman Brothers Inc.'s sole judgment, material and adverse and that makes it impracticable or inadvisable to proceed with the offering or delivery of the Shares as contemplated by the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto). (j) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, (i) there shall not have been a material adverse change, or any development involving a prospective material adverse change, in the general affairs, business, prospects, properties, management, key personnel, condition (financial or other) or results of operations of the Company and the Subsidiaries, whether or not arising from transactions in the ordinary course of business, in each case other than as set forth in the Registration Statement and the Prospectus (or, in the case of a prospective change, other than as contemplated by the Registration Statement and the Prospectus), and (ii) the Company shall not have sustained any material loss or interference with its business or properties from fire, explosion, flood, hurricane or other casualty or calamity, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree, which is not set forth in the Registration Statement and the Prospectus, if in your reasonable judgment any such development makes it impracticable or inadvisable to consummate the sale and delivery of the Shares at the public offering price. (k) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall have been no litigation or other proceeding instituted against the Company or any of its officers or directors in their capacities as such, before or by any federal, state, or local court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, which litigation or proceeding an unfavorable ruling, decision or finding would reasonably be expected to have a Material Adverse Effect. (l) At the time of execution of this Agreement, the Company shall have furnished to you a letter addressed to you from each officer and director of the Company and each shareholder or other person heretofore designated by you, in the form of Exhibit A hereto. (m) The Shares shall be qualified for sale in such jurisdictions as you shall have requested subject to the terms hereof, each such qualification shall be in effect. (n) The Shares shall have been listed on the New York Stock Exchange, subject to official notice of issuance. (o) You shall not have advised the Company that the Registration Statement, the preliminary prospectus or the Prospectus, or any amendment or any supplement thereto, 31 contains an untrue statement of fact which, in your judgment, is material, or omits to state a fact which, in your judgment, is material and is required to be stated therein or necessary to make the statements therein not misleading and, if you have so advised the Company, the Company shall not have cured such untrue statement of fact or omission of such statement of fact. (p) The Company shall have furnished to you such certificates, in addition to those specifically mentioned herein, as you may have reasonably requested (i) as to the accuracy and completeness (to the extent required under applicable law) at the Closing Date and the Additional Closing Date, if applicable, of any statement in the Registration Statement or the Prospectus, (ii) as to the accuracy at the Closing Date and the Additional Closing Date, if applicable, of the representations, warranties and covenants of the Company herein, (iii) as to the performance by the Company of its obligations hereunder, or (iv) as to the fulfillment of the conditions concurrent and precedent to your obligations hereunder. (q) Prior to the Closing Date and the Additional Closing Date, if applicable, the Company and the Selling Shareholders shall have furnished to the Underwriters such further information and documents as you may reasonably request. If any of the conditions specified in this Section 10 shall not have been fulfilled in all respects when and as required to be satisfied, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to you and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder may be terminated at, or at any time on or prior to, the Closing Date (and Additional Closing Date, if applicable) by Lehman Brothers Inc. Notice of such termination shall be given to the Company and the Selling Shareholders promptly in writing or by telephone confirmed in writing. 11. Default by an Underwriter. (a) If any Underwriter or Underwriters shall default in its or their obligations to purchase Firm Shares or Option Shares hereunder, and if the Firm Shares or Option Shares with respect to which such default relates do not (after giving effect to arrangements, if any, made by you pursuant to subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares or Option Shares, the Shares to which the default relates shall be purchased by the non-defaulting Underwriters in proportion to the respective proportions which the numbers of Firm Shares set forth opposite their respective names in Schedule 1 hereto bear to the aggregate number of Firm Shares set forth opposite the names of the non-defaulting Underwriters; provided, however, that each non-defaulting Underwriter shall not be obligated to purchase more than 110% of the number of the Shares which it agreed to purchase on the Closing Date pursuant to the terms of Section 3. (b) In the event that such default relates to more than 10% of the Firm Shares or Option Shares, as the case may be, you may in your discretion arrange for yourself or for another party or parties (including any non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm Shares or Option Shares, as the case may be, to which such default relates on the terms contained herein. In the event that within 5 calendar days after such a 32 default you do not arrange for the purchase of the Firm Shares or Option Shares, as the case may be, to which such default relates as provided in this Section 11, this Agreement (or, in the case of a default with respect to the Option Shares, the obligations of the Underwriters to purchase and of Selling Shareholders to sell the Option Shares) shall thereupon terminate, without liability on the part of the Company or the Selling Shareholders, with respect thereto (except in each case as provided in Section 6, 8(a) and 9 hereof), or the Underwriters, but nothing in this Agreement shall relieve a defaulting Underwriter or Underwriters of its or their liability, if any, to the other Underwriters and the Company for damages occasioned by its or their default hereunder. Notwithstanding the foregoing, if any default occurs with respect to the Additional Closing, this Agreement will not terminate with respect to the Firm Shares purchased prior to such time. (c) In the event that the Firm Shares or Option Shares to which the default relates are to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, you or the Company or the Selling Shareholders, as the case may be, shall have the right to postpone the Closing Date or Additional Closing Date, as the case may be, for a period not exceeding five business days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment or supplement to the Registration Statement or the Prospectus which, in the opinion of Underwriters' counsel, may thereby be made necessary or advisable. The term "Underwriter" as used in this Agreement shall include any party substituted under this Section 11 with like effect as if it had originally been a party to this Agreement with respect to such Firm Shares and Option Shares. 12. Survival of Representations and Agreements. All representations and warranties, covenants and agreements of the Underwriters, the Company and the Selling Shareholders contained in this Agreement, including the agreements contained in Section 5, Section 6, Section 7, the indemnity agreements contained in Section 8 and the contribution agreements contained in Section 9, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any controlling person thereof, by or on behalf of the Company, any of its officers, directors or employees or any controlling person thereof or any Selling Shareholder and shall survive delivery and acceptance of, and payment for the Shares to and by the Underwriters. The representations contained in Section 1 and Section 2 and the agreements contained in Sections 6, 8 and 9 and 13(d) hereof also shall survive the termination of this Agreement, including termination pursuant to Section 11 or 13 hereof. A successor to any Underwriter, or to the Company or any Selling Shareholder, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in Section 8 and Section 9 hereof. 13. Effective Date of Agreement; Termination. (a) This Agreement shall become effective upon the later of when (i) you and the Company shall have received notification of the effectiveness of the Registration Statement or (ii) the execution of this Agreement. If either the public offering price or the purchase price per Share has not been agreed upon prior to 5:00 P.M., New York time, on the fifth full business day after the Registration Statement shall have become effective, this Agreement shall thereupon terminate without liability to the Company, the Selling Shareholders or the Underwriters except 33 as herein expressly provided. Until this Agreement becomes effective as aforesaid, it may be terminated by the Company by notifying the Representatives or by the Representatives notifying the Company. Notwithstanding the foregoing, the provisions of this Section 13 and of Sections 1, 2, 6, 8 and 9 hereof shall at all times be in full force and effect. (b) Lehman Brothers Inc. shall have the right to terminate this Agreement at any time on or prior to the Closing Date, or the obligations of the Underwriters to purchase the Option Shares at any time on or prior to the Additional Closing Date, as the case may be (but in any event prior to delivery of and payment for the Shares), if (A) any domestic or international event or act or occurrence has materially disrupted, or in your opinion will in the immediate future materially disrupt, the market for the Company's securities or securities in general; or (B) if trading on the New York or American Stock Exchanges or Nasdaq National Market shall have been suspended, or limited, minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, on the New York Stock Exchange or the Nasdaq National Market by the New York Stock Exchange or the Nasdaq National Market or by order of the Commission or any other governmental authority having jurisdiction; or (C) if a banking moratorium has been declared by a state or federal authority or if any new restriction materially adversely affecting the distribution of the Firm Shares or the Option Shares, as the case may be, shall have become effective; or (D)(i) there shall have occurred any outbreak or escalation of hostilities or there is an outbreak or escalation of national or international hostilities or there is a declaration by the United States of a national emergency or war or (ii) if there has been any crisis or calamity or any change or development in United States' or international political, financial or economic conditions, if the effect of any such event in (D)(i) or (D)(ii), in the sole judgment of Lehman Brothers Inc. makes it impracticable or inadvisable to proceed with the offering, sale and delivery of the Firm Shares or the Option Shares, as the case may be, on the terms contemplated by the Prospectus (exclusive of any supplement thereto) or to enforce contracts for the sale of securities; or (E) in the sole judgment of Lehman Brothers Inc. there shall have occurred any Material Adverse Effect or (F) the Company shall have sustained a loss by strike, fire, flood, earthquake, accident or other calamity of such character as in the sole judgment of Lehman Brothers Inc. may interfere materially with the conduct of the business and operations of the Company regardless of whether or not such loss shall have been insured. Any termination pursuant to this Section shall be without liability on the part of (a) the Company to any Underwriter, except that the Company shall be obligated to reimburse the expenses of Lehman Brothers Inc. and the underwriters to the extent required pursuant to Sections 6, 8 and 9 hereof, (b) any Underwriter to the Company and/or the Selling Shareholders and (c) any party hereto to any other party except that the provisions of Sections 6, 8 and 9 shall at all times be effective and shall survive such termination. (c) Any notice of termination pursuant to this Section 13 shall be by telephone or facsimile and confirmed in writing by letter. (d) If this Agreement shall be terminated pursuant to any of the provisions hereof (otherwise than pursuant to (i) notification by you as provided in Section 13(a) hereof or (ii) Section 11(b) or 13(b) hereof), or if the sale of the Shares provided for herein is not consummated because any condition to the obligations of the Underwriters set forth herein is not satisfied or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof, the Company will, subject to demand by 34 you, reimburse the Underwriters for all out-of-pocket expenses (including but not limited to the fees and expenses of their counsel), incurred by the Underwriters in connection herewith. 14. Notices. Any notice or notification in any form to be given hereunder shall be in writing and shall be delivered in person or sent by telephone or facsimile transmission (but in the case of a notification by telephone, with subsequent confirmation by letter or facsimile transmission). Any notice or notification to you shall be addressed to: Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Facsimile: (212) 526-6159 Attention: Robert Milius, Vice President ABN AMRO Rothschild LLC 55 East 52nd Street New York, New York 10055 Facsimile: (212) 409-6654 Attention: James Dowling, Managing Director With a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038-4982 Facsimile: (212) 806-6006 Attention: Melvin Epstein, Esq. Any notice or notification to the Company shall be addressed to the Company at: General Maritime Corporation 35 West 56th Street New York, NY 10019 Facsimile: (212) 763-5602 Attention: Chief Executive Officer With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, New York 10022 Facsimile: (212) 715-8000 Attention: Thomas E. Molner, Esq. Any notice or notification to any Selling Shareholder shall be addressed to such Selling Shareholder in care of the Company at: 35 General Maritime Corporation 35 West 56th Street New York, NY 10019 Facsimile: (212) 763-5602 Attention: Chief Executive Officer With a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90071-3144 Facsimile: (213) 687-5600 Attention: _________________, Esq. Any notice or notification shall (subject to confirmation when required) take effect at the time of receipt. 15. Parties. This Agreement shall inure solely to the benefit of, and shall be binding upon, the Underwriters, the Company, the Selling Shareholders and the controlling persons, directors, officers, employees and agents referred to in Section 8 and 9, and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of Shares from any of the Underwriters. Notwithstanding the foregoing, this Agreement and the terms and provisions hereof are, unless otherwise specified herein, for the sole benefit of only those persons, except that (a) the representations, warranties, indemnities and agreements of the Company and the Selling Shareholders contained in this Agreement shall also be deemed to be for the benefit of the directors, officers, employees, and agents of each Underwriter and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (b) the indemnity agreement of the Underwriters contained in Section 8 hereof shall be deemed to be for the benefit of the directors, officers, employees, and agents of the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act. 16. Consent to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby ("Related Proceedings") may be instituted in the federal courts of the United States of America located in the City and County of New York or the courts of the State of New York in each case located in the City and County of New York (collectively, the "Specified Courts"), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "Related Judgment"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree 36 not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum. 17. Miscellaneous. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to contracts made and to be wholly performed within the State of New York. This Agreement may be executed in one or more counterparts, and if executed in more than one counterpart, the executed counterparts shall together constitute a single instrument. The descriptive headings in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. If any provision or portion of any provision of the Agreement, or the application of any such provision or any portion thereof to any party or circumstances, shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this agreement, and the application of such provision or portion of such provision as is held invalid or unenforceable to any parties or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and such remaining portion of such provision and the remaining provisions of this Agreement shall continue to be valid and in full force and effect. If the foregoing is in accordance with the Underwriters' understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement among the Company, the Selling Shareholders and the Underwriters in accordance with its terms. 37 Very truly yours, GENERAL MARITIME CORPORATION By:____________________________________ Name: Title: THE SELLING SHAREHOLDERS By:____________________________________ Name: Title: As Attorney-in-Fact acting on behalf of the Selling Shareholders Named in Schedule 2 hereto 38 The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. LEHMAN BROTHERS INC. By: Lehman Brothers, Inc. Acting on its own behalf and as one of the Representatives of the several Underwriters referred to in the foregoing Agreement By:___________________________ Name: Title: ABN AMRO Rothschild LLC By: ABN AMRO Rothschild LLC Acting on its own behalf and as one of the Representatives of the several Underwriters referred to in the foregoing Agreement By:___________________________ Name: Title: JEFFERIES & COMPANY, INC. By: Jefferies & Company, Inc. Acting on its own behalf and as one of the Representatives of the several Underwriters referred to in the foregoing Agreement By:___________________________ Name: Title: 39 SCHEDULES Schedule 1 - Underwriters Schedule 2 - Selling Shareholders EXHIBITS Exhibit A - Form of Lock-Up Agreement ANNEXES Annex A - Legal Opinion of Kramer Levin Annex B - Legal Opinion of ____________ Annex C - Legal Opinion of ____________ 40 SCHEDULE I UNDERWRITERS Underwriting Agreement dated May __, 2001 Number of Firm Shares to be Purchased from the Company ----------- Name Lehman Brothers Inc........ ABN AMRO Rothschild LLC.... Jefferies & Company, Inc. Total...................... B-1 SCHEDULE 2 SELLING SHAREHOLDERS [To be provided] B-2 EXHIBIT A LOCK-UP AGREEMENT May __, 2001 Lehman Brothers Inc. ABN AMRO Rothschild LLC Jefferies & Company, Inc. As Representatives of the Several Underwriters Named on Schedule I to the Underwriting Agreement c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Re: General Maritime Ship Holdings Ltd. Dear Sirs: This letter is being delivered to you in connection with the proposed Underwriting Agreement (the "Underwriting Agreement") among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, the "Company"), and Lehman Brothers Inc. (as joint lead manager), ABN AMRO Rothschild LLC (as joint lead manager), and Jefferies & Company, Inc., as representatives of the several underwriters named therein (the "Underwriters"), relating to an underwritten public offering of common stock, par value $0.01 per share (the "Common Stock"), of the Company. Capitalized terms used herein without definition shall have the meanings assigned to them in the Underwriting Agreement. To induce you to enter into the Underwriting Agreement, subject to any rights of the undersigned in Section 5 of the Registration Rights Agreement (the "Registration Rights Agreement") among the undersigned, the Company and the other parties thereto in which the undersigned may be entitled to sell its Registrable Securities (as defined in the Registration Rights Agreement) by means of the overallotment option in the Company's initial public offering, the undersigned agrees that the undersigned will not, directly or indirectly, (1) offer for sale, contract to sell, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock or securities convertible into, exercisable or exchangeable for, Common Stock or (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled B-3 by delivery of Common Stock or other securities, in cash or otherwise, in each case for a period of 180 days from the date of the Prospectus (such period, the "Lock-Up Period"), without the prior written consent of Lehman Brothers Inc., who shall consult with ABN AMRO Rothschild LLC before granting or withholding such consent; provided, that the foregoing restrictions shall not apply to (i) any gift of Common Stock by the undersigned to a donee, (ii) any transfer of Common Stock by the undersigned to a partner, member or stockholder of the undersigned, if the undersigned is a partnership, limited liability company or corporation respectively or (iii) any transfer of Common Stock in accordance with the Plan of Recapitalization (as defined below) by the undersigned to any other person or entity that has received Recapitalization Shares (as defined below) or the Company; provided that in the case of each of (i) and (ii), the transferee agrees in writing for the benefit of the Underwriters to be bound by the same restrictions with respect to such shares of Common Stock, and in the case of (iii) the transferee has entered into a Lock-Up Agreement in form and content substantially similar to this Agreement prior to the date on which the Registration Statement is declared effective or is the Company. For purposes of this Agreement (A) "Plan of Recapitalization" means that certain Plan of Recapitalization filed as Exhibit 2.1 to the Registration Statement and (B) "Recapitalization Shares" shall mean shares of Common Stock issued in connection with the Company's recapitalization as set forth in the Plan of Recapitalization. In addition to the foregoing, during the Lock-Up Period, the undersigned agrees that the undersigned will not, directly or indirectly, make any demand for, or exercise any right with respect to, the registration of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock without the prior written consent of Lehman Brothers Inc., who shall consult with ABN AMRO Rothschild LLC before granting or withholding such consent. In addition to the foregoing, during the Lock-Up Period, in the event that Lehman Brothers Inc. (after consulting with ABN AMRO Rothschild LLC) consents to the sale or other disposition by the undersigned of Recapitalization Shares, Lehman Brothers Inc. shall be deemed to have consented to the sale or other disposition by each other person or entity that has received Recapitalization Shares of a number of Recapitalization Shares representing the same proportion of Recapitalization Shares initially issued to such other person or entity as the number of Recapitalization Shares sold or disposed of by the undersigned bears to the Recapitalization Shares initially issued to the undersigned. Any shares of Common Stock received upon exercise of options or warrants granted to the undersigned will also be subject to this Agreement. Any securities acquired by the undersigned in the open market will not be subject to this Agreement. If for any reason the Underwriting Agreement is terminated before the Closing Date, this Agreement shall likewise be terminated. This Agreement shall lapse and become null and void if the Closing Date shall not have occurred on or before July 15, 2001. B-4 Very truly yours, _______________________________________ By:________________________________ Legal name of Stockholder as it appears Name: on the Corporate Records of the Company Title: B-5 ANNEX A B-6 ANNEX B B-7 ANNEX C B-8 EX-2.1 3 a2050304zex-2_1.txt EXHIBIT 2.1 Exhibit 2.1 ANNEX A PLAN OF RECAPITALIZATION General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation at the Recapitalization Closing Time, "IPO-Co"), has determined to undertake an initial public offering (the "IPO") of its common stock (the "Common Stock"). In connection therewith, IPO-Co has agreed to certain transactions described herein (collectively, the "Recapitalization"). This Annex is attached to and made a part of each of the Vessel Acquisition Agreements (as defined in Section 3 below) pursuant to which the Recapitalization will be effected. 1. Assets of IPO-Co. Prior to the Recapitalization, IPO-Co will have no substantial assets and no shares outstanding. 2. Acquisition of Old General Maritime. IPO-Co will acquire the capital stock of General Maritime Corporation, a Marshall Islands corporation, the corporate successor to old General Maritime Corporation, a New York corporation ("Old Genmar") for Common Stock. 3. Vessel Acquisition Agreements. Subject to Section 11, IPO-Co intends to acquire 22 vessels (the "Vessels") through three different types of agreement (collectively, the "Vessel Acquisition Agreements"): (i) Exchanging Partnerships. Fourteen Vessels will be acquired indirectly through the acquisition of seven Cayman Islands limited partnerships (the "Exchanging Partnerships") and the companies directly or indirectly wholly-owned by Peter C. Georgiopoulos that act as general partners. These acquisitions will be accomplished by an exchange by each limited partner of each Exchanging Partnership of all of its partnership interests in the Exchanging Partnership and the exchange by Peter C. Georgiopoulos and companies owned by him (the "General Partner Owners") of all of the outstanding capital stock of the managing general partners and administrative general partners of the Exchanging Partnerships for Common Stock (the General Partner Owners and each such limited partner, collectively, the "Exchanging Partners"). Set forth below is a list of the Exchanging Partnerships and the Vessels they own: - -------------------------------------------------------------------------------- Exchanging Partnership Vessel(s) - -------------------------------------------------------------------------------- Ajax Limited Partnership Genmar Agamemnon Genmar Ajax Genmar Constantine Genmar Minotaur - -------------------------------------------------------------------------------- Ajax II L.P. Genmar Gabriel Genmar Macedon Genmar Spartiate Genmar Zoe - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Boss, L.P. Genmar Boss Genmar Sun - -------------------------------------------------------------------------------- General Maritime I, L.P. Alta - -------------------------------------------------------------------------------- General Maritime II, L.P. Genmar Commander - -------------------------------------------------------------------------------- Harriet, L.P. Harriet - -------------------------------------------------------------------------------- Pacific Tankship, L.P. Genmar George - -------------------------------------------------------------------------------- (ii) Acquisition of Wexford Vessels. Five Vessels owned by affiliates of Wexford Capital, LLC and commercially managed by Old Genmar (the "Wexford Vessels") will be acquired from the limited liability companies and limited partnerships which own them (the "Wexford Sellers") by acquisitions of five special purpose subsidiaries which directly own the Vessels. The following are the Wexford Vessels: the Kentucky, the West Virginia, the Genmar Alexandra, the Genmar Hector and the Genmar Pericles. IPO-Co will issue Common Stock and repay the Indebtedness which is secured by these Vessels as consideration; and (iii) Acquisition of the Post-Closing Vessels. One Vessel, the Stavanger Prince will be acquired from KS Stavanger Prince and two Vessels, the Anella and the Anja (these three Vessels, the "Post-Closing Vessels"), will be acquired from Blystad Shipholding Inc., Liberia (the "Post-Closing Sellers") in exchange for Common Stock. IPO-Co will issue Common Stock and repay the Indebtedness which is secured by these Vessels to the extent provided in the Memorandum of Agreement for each such purchase as consideration. The Exchanging Partnerships, the Wexford Sellers and the Post-Closing Sellers are referred to herein as the "Transferring Vessel Owners." The Exchanging Partners, the Wexford Sellers, the Post-Closing Sellers and Peter C. Georgiopoulos in respect of the Genmar Shares (as defined below) are referred to herein as the "Recipients." 4. Recapitalization Closing Time. The time of closing of the Recapitalization ("Recapitalization Closing Time") will occur simultaneously with the execution of a firm commitment underwriting agreement for the IPO (the "Underwriting Agreement"), which is expected to be three days prior to the closing of the IPO, except that the closing of the purchase of the special purpose subsidiaries which directly own the Wexford Vessels will occur simultaneously with the closing of the IPO, and the closing of the purchase of the Post-Closing Vessels will occur thereafter once arrangements have been made for inspection and delivery of the vessels. 5. IPO Terms. The Underwriting Agreement will specify a price per share to the public in the IPO (the "IPO Price"). It shall also specify a total number of shares of Common Stock to be outstanding immediately prior to the closing of the IPO following completion of the acquisitions described in Sections 2 and 3 above (the "Recapitalization Shares"). The IPO Price will be determined by negotiation between the representative of the underwriters and IPO-Co. A pricing committee comprised solely of Peter C. Georgiopoulos, Stephen Kaplan and Mark Polzin shall approve in their sole discretion the IPO Price and the number of Recapitalization Shares in A-2 writing prior to execution of the Underwriting Agreement. In the event that Peter C. Georgiopoulos is unavailable, a substitute designated by IPO-Co shall serve on the pricing committee. In the event that Stephen Kaplan is unavailable, a substitute designated by Oaktree Capital Management, LLC shall serve on the pricing committee. In the event that Mark Polzin is unavailable, a substitute designated by Moreland Management Company shall serve on the pricing committee. In connection with each such person's service on the pricing committee, IPO-Co will indemnify such persons pursuant to an indemnification agreement reasonably satisfactory to the pricing committee members. 6. Determination of Distribution of the Recapitalization Shares. In each case subject to procedures for avoidance of fractional shares pursuant to Section 7 below and the provisions of Section 10 below, IPO-Co shall determine the distribution of the Recapitalization Shares as follows: (i) Peter C. Georgiopoulos will receive a number of shares (the "Genmar Shares") in respect of Old Genmar equal to 10% of the excess of (A) the Recapitalization Shares over (B) a number of shares at the IPO Price equal to the Aggregate Vessel Relative Value. (ii) A number of shares of Common Stock (the "Vessel Owner Purchase Price") shall be allocated to each Transferring Vessel Owner based on the following calculation: Vessel Owner Purchase Price = Available Shares x Owner Vessel Relative Value ---------------------------------------------- Aggregate Vessel Relative Value As used in the foregoing equation: "Available Shares" means the total number of Recapitalization Shares minus the Genmar Shares. "Owner Vessel Relative Value" means the aggregate Vessel Relative Value (as defined in Section 8 below) for the Vessel or Vessels owned directly or indirectly by the Transferring Vessel Owner for which the calculation is being made. "Aggregate Vessel Relative Value" means the aggregate Vessel Relative Value for all of the Vessels. (iii) In the case of Vessels transferred directly or indirectly by the Wexford Sellers and the Post-Closing Sellers, the Vessel Owner Purchase Price will be delivered to the Transferring Vessel Owner in accordance with Section 9 below. In the case of Vessels acquired by the acquisition of partnership interests of Exchanging Partnerships, the Vessel Owner Purchase Price shall be delivered to the Exchanging Partners on the same basis as if: (A) such shares had been delivered to the Exchanging Partnership in exchange for the assets and liabilities of the Exchanging Partnership reflected in the calculation of Vessel Relative Value; (B) the Exchanging Partnership had then dissolved (without establishment of any reserves thereunder); and (C) A-3 all partners of the Exchanging Partnership had agreed to distribute such shares on the same basis as cash would be distributed under the provisions of the applicable partnership agreement treating each such share as if it were an amount of cash equal to the IPO Price; provided that shares allocated to the managing general partner or the administrative general partner of the Exchanging Partnership shall be issued directly to the General Partner Owners. 7. Fractional Shares. IPO-Co may adjust the number of shares which would otherwise be issued or delivered by IPO-Co or from an Escrow Account pursuant to Section 6 or Section 9 so as to eliminate fractional shares and so as to ensure that the number of shares outstanding following the distribution equals the total pre-IPO capitalization authorized by the Board of Directors of IPO-Co and set forth in the Underwriting Agreement and IPO-Co's public filings in connection with the IPO. This may result in Recipients receiving, at the discretion of IPO-Co, more or fewer shares (by a small number of shares or fraction thereof) than they would otherwise receive pursuant to Section 6 and Section 9. Any Recipient who would have been entitled to receive shares or fractions thereof but for this Section shall receive a cash payment therefor based on the IPO Price. Any Recipient who receives additional shares or fractions thereof pursuant to this Section shall be required to pay for such shares or fractions thereof in cash based on the IPO Price. 8. Calculation of Vessel Relative Value. Vessel Relative Value shall be calculated as follows: (i) For each Vessel owned directly or indirectly by the Exchanging Partnerships and the Wexford Vessels, Vessel Relative Value shall equal the Appraised Value of such Vessel plus any Cash, Loans Receivable, Restricted Cash, Accounts Receivable, Due from Charterer, and Prepaid Expenses of the entities transferred (directly or indirectly) to IPO-Co pursuant to the Vessel Acquisition Agreement minus (A) any Accounts Payable and Accrued Interest Expense transferred (directly or indirectly) to IPO-Co pursuant to the Vessel Acquisition Agreement and (B) any Indebtedness transferred (directly or indirectly) to IPO-Co in the case of the Exchanging Partnerships and repaid by IPO-Co in the case of the Wexford Vessels. For the Post-Closing Vessels, Vessel Relative Value shall equal the Appraised Value of the Vessel minus any Indebtedness repaid or to be repaid by IPO-Co in connection with the acquisition of the Vessel and any other cash paid to or for the account of the applicable Post-Closing Seller in respect of the Vessel at the closing of the Vessel. (ii) The "Appraised Value" means, for each Vessel, an amount to be conclusively determined (absent manifest error) by IPO-Co's calculation of the average of three valuations of each Vessel obtained by IPO-Co as of March 31, 2001 from Braemar Shipbrokers Ltd., Mallory, Jones, Lynch, Flynn & Assoc. Inc. and Fearn Sale. A-4 (iii) "Accounts Payable," "Accounts Receivable," "Accrued Interest Expense," "Cash," "Due from Charterer," "Indebtedness," "Loans Receivable," "Prepaid Expenses" "Restricted Cash" each have the meanings provided therefor in accordance with U.S. generally accepted accounting principles as applied by IPO-Co consistent with its financials as set forth in the Prospectus for its IPO. Such amounts shall be calculated as of the Recapitalization Closing Time as finally reviewed by Deloitte & Touche LLP, IPO-Co's auditors in accordance with AICPA standards. 9. Determination and Delivery of Vessel Owner Purchase Price. A. Recapitalization Closing Time and the Escrow Accounts. (i) Prior to the Recapitalization Closing Time, IPO-Co shall make a preliminary estimate (the "Preliminary Calculation") of Vessel Owner Purchase Price for each Transferring Vessel Owner and the number of shares of Common Stock to which each Recipient is entitled. For this purpose, calculations of Accounts Payable, Accounts Receivable, Accrued Interest Expense, Cash, Due from Charterer, Indebtedness, Loans Receivable, Prepaid Expenses, and Restricted Cash shall take into account the most recent financials of the Transferring Vessel Owners and the appraisals of the relevant Vessels at March 31, 2001. The Preliminary Calculations shall be set forth in a certificate of IPO-Co and shall be final, binding and conclusive for purposes of the Recapitalization Closing Time. (ii) At the Recapitalization Closing Time, IPO-Co shall deliver a certificate evidencing the Recapitalization Shares to an escrow agent (the "Escrow Agent") who shall hold such shares for delivery as provided herein. (iii) The Escrow Agent will establish four accounts (the "Escrow Accounts") and IPO-Co will instruct the Escrow Agent to place in each account the number of shares provided for herein in a sub-account for the account of each Recipient. The first account (the "Post-Closing Vessel Account") shall consist of shares to which the Post-Closing Sellers will be entitled upon closing of the acquisition of the Post-Closing Vessels following the Recapitalization Closing Time. The second account (the "Purchase Price Calculation Account") shall consist of 10% of the shares to which the Recipients are entitled at the Recapitalization Closing Time or for the Wexford Vessels and the Post-Closing Vessels the closing of the relevant Vessel Acquisition Agreement and will be distributed in connection with the Calculation (as defined below). The third account (the "Indemnity Account") will consist of 10% of the shares to which the Recipients other than the Post-Closing Sellers are entitled at the Recapitalization Closing Time or for the Wexford Vessels at the closing of the Vessel Acquisition Agreement for the Wexford Vessels and shall be available to satisfy indemnification obligations under the Vessel Acquisition Agreements. The fourth account (the "Collar Account") will consist of the Collar A-5 Shares (as defined below) and will be distributed in connection with the Final Collar Certificate (as defined in Annex A-1). IPO-Co shall cause the Escrow Agent to deliver certificates evidencing the remainder of the Recapitalization Shares other than Shares in the Post-Closing Vessel Account to the Recipients other than the Post-Closing Sellers as promptly as practicable and in any event no later than 30 days following the Recapitalization Closing Time in accordance with the Preliminary Calculation. (iv) In the event that the Vessel Acquisition Agreement for purchase of any Wexford Vessel or Post-Closing Vessel is terminated without the closing of any Vessel thereunder, (1) IPO-Co shall instruct the Escrow Agent to deliver the shares of Common Stock which would otherwise be deliverable hereunder in respect of such Vessel to IPO-Co and (2) Peter C. Georgiopoulos will return to IPO-Co a portion of the Genmar Shares equal to the total number of Genmar Shares multiplied by a fraction, the numerator of which is the number of shares described under the preceding clause (1), and the denominator of which is the total Available Shares. B. Post-Closing Time Adjustment and Settlement of Purchase Price Calculation Accounts. (i) Following the Recapitalization Closing Time, IPO-Co shall recalculate the amounts set forth in (A)(i) above using amounts for Cash, Loans Receivable, Restricted Cash, Accounts Receivable, Due from Charterer, Indebtedness, Prepaid Expenses, Accrued Interest Expense and the Appraised Value in each case as of the Recapitalization Closing Time as calculated and reviewed by Deloitte & Touche LLP, IPO-Co's auditors in accordance with AICPA standards (the "Calculation"). (ii) No later than 90 days following the Recapitalization Closing Time, IPO-Co shall deliver to each Recipient a certificate (the "Calculation Certificate") setting forth the Calculation and the number of shares of Common Stock to which such Recipient is entitled based thereon. The Calculation Certificate shall be calculated and reviewed by Deloitte & Touche LLP in accordance with AICPA standards and shall be the final, conclusive and binding determination of the matters set forth therein except to the extent a matter set forth therein is the subject of a dispute in accordance with Annex A-1. (iii) If the number of shares as set forth in the Final Calculation Certificate (as defined in Annex A-1) for a Recipient exceeds the number of shares previously delivered to (and held in Escrow Accounts in respect of) such Recipient, then the Escrow Agent shall deliver according to the instructions of (and place in appropriate Escrow Accounts, in accordance with the last sentence of clause B(v) below, in respect of) such Recipient a number of shares such that the number of shares delivered to (and placed A-6 in Escrow Accounts in respect of) such Recipient is in accordance with clause (B)(i) above, taking into account the Final Calculation Certificate. (iv) If the number of shares as set forth in the Final Calculation Certificate for a Recipient is less than the number of shares previously delivered to (or held in the appropriate sub-account of the Purchase Price Calculation Account (or other account as set forth in clause (v) in respect of) such Recipient, then such Recipient shall deliver to the Escrow Agent for redelivery to Recipients entitled to additional shares under clause (B)(iii) above (and IPO-Co may instruct the Escrow Agent to remove from the appropriate sub-account of the Purchase Price Calculation Account (or other account as set forth in clause (v) and to redeliver) a number of shares such that the number of shares delivered to (and held back in respect of) such Recipient is in accordance with clause (B)(i) above, taking into account the Final Calculation Certificate. (v) Shares to be delivered by a Recipient under clause (B)(iv) above will be provided first from the Recipient's sub-account in the Purchase Price Calculation Account. Such shares shall next be provided from shares held in any sub-Escrow Accounts of such Recipient other than the Purchase Price Calculation Account which exceed the amount required to be held in such account in accordance with clause (B)(iv) above. IPO-Co may instruct the Escrow Agent to release and deliver shares in accordance with the preceding two sentences. After all of the shares required to be delivered by a Recipient pursuant to clause (B)(iv) have been delivered, IPO-Co shall instruct Escrow Agent to release (1) any shares remaining in the appropriate sub-account of the Purchase Price Calculation Account and (2) any shares in any sub-Escrow Account other than the Purchase Price Calculation Account which exceed the amount required to be held in such sub-account in accordance with clause (B)(iv) above, and deliver such shares in accordance with the instructions of such Recipient. In the event that a Recipient is entitled to additional shares pursuant to clause (B)(iii) above, an appropriate portion of such shares shall be delivered into the Recipient's sub-account of the Indemnity Account, the Collar Account and the Post-Closing Vessel Account, in each case if applicable, for such Recipient and IPO-Co may instruct the Escrow Agent to so deliver such shares. C. Collar Calculation and Settlement of the Collar Account. (i) This Section 9(C) applies only to the Exchanging Partners of the Exchanging Partnerships. No later than 45 days following the Collar Calculation Date (as defined below), IPO-Co shall provide a certificate (a "Collar Certificate") recalculating the number of shares to which each Recipient who is a General Partner Owner or a limited partner of an Exchanging Partnership is entitled (but not recalculating the aggregate number of shares allocated in respect of an Exchanging Partnership), as A-7 provided in clause (A)(i) above as modified by clause (B) above with the sole alteration to such calculation being the use of the Recalculation Price in place of the IPO Price for purposes of Section 6(iii) only (the "Collar Adjustment"). The Collar Certificate shall be provided to each Recipient that was an Exchanging Partner. Such amounts shall be calculated and reviewed by Deloitte & Touche LLP in accordance with AICPA standards and shall be final and conclusive except to the extent a matter set forth therein is the subject of a dispute in accordance with Annex A-1. (ii) If the number of shares as set forth in the Final Collar Certificate for a Recipient exceeds the number of shares previously delivered to (and held back in respect of) such Recipient, IPO-Co shall instruct the Escrow Agent to deliver from the sub-account of the Collar Account for such Recipient according to the instructions of such Recipient (or to any remaining sub-Escrow Account in respect of such Recipient) a number of shares such that the number of shares delivered to (and held back in respect of) such Recipient is in accordance with clause (A)(i) above as modified by clause (B) above with the sole alteration to such calculation being the use of the Collar Adjustment. (iii) If the number of shares as set forth in the Final Collar Certificate for a Recipient is less than the number of shares previously delivered to (and held back in respect of) such Recipient, IPO-Co shall instruct the Escrow Agent to remove from the Recipient's sub-account of the Collar Account and redeliver to Recipients entitled to additional shares pursuant to clause (C)(ii) above a number of shares such that the number of shares delivered to (and held back in respect of) such Recipient is in accordance with clause (A)(i) above as modified by clause (B) above with the sole alteration to such calculation being the use of the Collar Adjustment, provided that any adjustment reducing shares for the account of a Recipient in connection with the Final Collar Certificate will be made solely from shares in the Recipient's sub-account of the Collar Account after adjustment in respect of the Final Calculation Certificate. (iv) The provisions of clauses (C)(ii) and (C)(iii) shall be implemented separately with respect to the General Partner Owners (a) as Recipients for shares they are entitled to receive in respect of their capital contributions to the Exchanging Partnerships; and (b) as Recipients for any additional shares they are entitled to receive other than in respect of their capital contributions to the Exchanging Partnerships. (v) If pursuant to clause (C)(iii), a Recipient is required to return shares to the Escrow Agent for redelivery pursuant to clause (C)(ii), then IPO-Co shall instruct Escrow Agent to remove shares from the Indemnity Account or the Purchase Price Calculation Account of such Recipient (if still in place) which exceed the amount which would have been required to be held in such account in accordance with clause (A)(iii) above had the calculation A-8 in clause (A)(iii) been made on the basis of the Final Collar Certificate and release them for delivery as instructed by Recipient. After all of the shares required to be delivered by a Recipient pursuant to clause (C)(iii) have been delivered, IPO-Co shall instruct Escrow Agent to release any shares remaining in the Collar Account for such Recipient in accordance with the instructions of such Recipient. In the event that a Recipient is entitled to additional shares pursuant to clause (C)(ii) above, an appropriate portion of such shares shall be delivered into the Indemnity Account, the Purchase Price Calculation Account and the Post-Closing Vessel Account, in each case if applicable, for such Recipient and IPO-Co may instruct the Escrow Agent to so deliver such shares. (vi) As used herein, "Collar Shares" means (a) as to each limited partner of an Exchanging Partnership and as to each General Partner Owner but only to the extent of any shares they are entitled to receive in respect of capital contributions to an Exchanging Partnership, a number of shares of Common Stock equal to the excess of (1) the number of shares of Common Stock to which such Recipient is entitled under Section 6(iii) in respect of such Exchanging Partnership (as to the General Partner Owners in respect of such capital contributions) over (2) the number of shares of Common Stock to which such Recipient would have been so entitled had the IPO Price been the actual IPO Price plus $5.00 and (b) as to the General Partner Owners in respect of shares they are entitled to receive other than in respect of capital contributions, a number of shares of Common Stock equal to the excess of (1) the number of shares of Common Stock to which the General Partner Owners are entitled under Section (6)(iii) as managing general partners based on a percentage of shares distributed to such limited partners over (2) the number of shares of Common Stock to which the General Partner Owners would have been so entitled had the IPO Price been the actual IPO Price minus $5.00. (vii) As used herein, "Collar Calculation Date" means the earlier to occur of (a) the closing date of an underwritten public offering in which (together with all prior registered public offerings of the Company) limited partners of the Exchanging Partnerships have sold an aggregate of at least one third of the shares of Common Stock issued to them or deposited in an escrow account on their behalf in the Recapitalization and (b) the first anniversary of the Recapitalization Closing Time. (viii) As used herein, "Recalculation Price" means the value per share of Common Stock determined as follows: (a) if the Collar Calculation Date is determined by clause (a) of the definition thereof, the price to the public in the public offering closing on the Collar Calculation Date and (b) if the Collar Calculation date is determined by clause (b) of the definition thereof, (1) if the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq Stock Market, the Recalculation Price A-9 shall be the average of the last reported sale price of the Common Stock on such exchange or market on the last twenty (20) trading days ending on the Collar Calculation Date (or the trading day immediately prior thereto if the Collar Calculation Date is not a trading day), or if no such sale is made on any such day, the average closing bid and asked prices for such day on such exchange or market (in each case rounded to the nearest penny); or (2) if the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, an amount, not less than book value per share of Common Stock at the end of the most recent fiscal year of IPO-Co ending prior to the Collar Calculation Date, determined in good faith and in such reasonable manner as may be prescribed by the Board of Directors of IPO-Co; provided that in no event shall the Recalculation Price be more than $5.00 greater or less than the actual IPO Price. D. Payments from Indemnity Account and General Partner Owners. (i) This Section 9(D) applies only to the Exchanging Partners of an Exchanging Partnership which are required to make payments from the Indemnity Account in respect of a breach by the Exchanging Partnership of a representation, warranty or covenant of the Exchanging Partnership pursuant to the Vessel Acquisition Agreement to which it is a party as set forth in Article 4, Article 10, or elsewhere in such Vessel Acquisition Agreement (an "Indemnity Payment"). The purpose of this Section 9(D) is to reallocate the shares of Common Stock distributed in respect of such Exchanging Partnership among its Exchanging Partners so that each of them will receive the same number of shares they would have received if the total number of shares previously delivered by IPO-Co in respect of such Exchanging Partnership had been reduced by the Indemnity Payment. This Section 9(D) does not apply to indemnification obligations arising from the breach of any representation, warranty, or covenant under a Vessel Acquisition Agreement by an individual Exchanging Partner. (ii) In the event that an Indemnity Payment is required in respect of an Exchanging Partnership, IPO-Co shall recalculate the number of shares to be distributed to the Exchanging Partners of such Exchanging Partnership pursuant to Section 6(iii) as adjusted to date under this Section 9 as if the Vessel Owner Purchase Price for such Exchanging Partnership had been reduced by the amount of such Indemnity Payment. If the number of shares distributed to (or held in the Indemnity Account sub-account in respect of) the General Partner Owner for such Exchanging Partnership prior to such Indemnity Payment (other than in respect of its capital contributions to such Exchanging Partnership) exceeds the number of shares which would be distributed to (or held in the Indemnity Account sub-account in respect of) the General Partner Owner for such Exchanging Partnership after such recalculation (other than in respect of its capital contributions to such Exchanging Partnership), such General Partner Owner shall deliver to IPO-Co a number of shares equal to such excess. Such shares shall be taken first from the sub-account of the Indemnity Account of such General Partner Owner in respect of such A-10 Exchanging Partnership; and then delivered by such General Partner directly. If such General Partner or its affiliate transferees no longer hold sufficient shares of Common Stock to make such delivery, they shall deliver cash at the IPO Price. (iii) IPO-Co shall distribute the shares or cash received from such General Partner Owner pursuant to the preceding clause (ii) among the limited partner Exchanging Partners and the General Partner Owner in respect of its capital contributions to such Exchanging Partnership in accordance with Section 6(iii) as adjusted to date under this Section 9 as if the Vessel Owner Purchase Price for such Exchanging Partnership had been reduced by the amount of the Indemnity Payment. (iv) Regardless of whether clauses (ii) and (iii) apply, after making any Indemnity Payment, IPO-Co shall instruct the Escrow Agent to reallocate the shares in the Indemnity Account from which such Indemnity Payment was made as if the Vessel Owner Purchase Price for such Exchanging Partnership had been reduced by the amount of such Indemnity Payment. If shares have been distributed under clause (iii) above, such reallocation shall take account of such distribution. (v) The calculations and determinations required by this Section 9(D) shall be set forth in a certificate of IPO-Co which shall be reviewed by Deloitte & Touche LLP in accordance with AICPA standards and provided to each Exchanging Partner of the relevant Exchanging Partnership. Such certificate shall be final and conclusive except to the extent a matter set forth therein is the subject of a dispute in accordance with Annex A-1. E. Payments from the Post-Closing Vessel Account. Upon the closing of the purchase of each Post-Closing Vessel, IPO-Co shall instruct the Escrow Agent to deliver a certificate evidencing the shares allocated to the Post-Closing Seller in respect of such Post-Closing Vessel under Section 9(A)(i) to such Post-Closing Seller; provided that 10% of such shares shall be placed in such Post-Closing Seller's sub-account of the Purchase Price Calculation Account. F. Splits and Adjustments. (i) In the event of a split, reverse split, distribution of securities, recapitalization, merger, consolidation or similar event relating to the Common Stock prior to the completion of the calculations and distributions required by this Section 9, the Board of Directors of IPO-Co shall adjust the calculations provided hereby in such manner as they determine to be equitable in the circumstances and in keeping with the arrangements provided for herein. (ii) All shares issued pursuant to this Section 9 shall be subject to adjustment pursuant to Section 7 and any issuance of shares under this Section 9 is subject to the terms of Section 10. 10. Limited Power to Substitute. In any case where this Plan of Recapitalization requires IPO-Co or the Escrow Agent to deliver Common Stock to a Recipient, IPO-Co may, at its A-11 election, substitute cash at the IPO price for up to 5% of the Common Stock to which a Recipient would otherwise be entitled if such substitution would result in the shares held by a shareholder constituting less than 5% of the value of the outstanding shares of stock (and/or the amount of outstanding shares of stock held by all holders of 5% of such shares either aggregating less than 50% of such shares or materially reducing the risk of aggregating more than 50% of such shares) for purposes of Section 883 of the Internal Revenue Code of 1986, as amended (the "Code"), or 10% of the voting stock (and/or the amount of shares of voting stock held by all holders of 10% of such shares either aggregating less than 50% of such shares or materially reducing the risk of aggregating more than 50% of such shares) for purposes of the determination of whether IPO-Co is a "controlled foreign corporation" as defined under Section 957 of the Code. In making these calculations IPO-Co may assume completion of the computations provided for in Section 9(C) on the basis of any Recalculation Price no more than $5.00 greater or less than the actual IPO Price. 11. Termination of One or More Acquisition Agreements or Elimination of One or More Vessels. To the extent (and only to the extent) expressly provided for under the terms and conditions of each Acquisition Agreement, IPO-Co may, in its discretion, terminate one or more Acquisition Agreements as a whole or terminate the acquisition of one or more Vessels under such Acquisition Agreement. In such event, the calculations provided hereunder shall be made as if such Acquisition Agreement or Vessel or Vessels had not been reflected herein. A-12 ANNEX A-1 Any Recipient entitled to receive IPO-Co's Calculation Certificate, IPO-Co's Collar Certificate or the certificate required by Section 9(D) (each a "Certificate") may contest any matter set forth therein but only if (i) such Recipient provides IPO-Co written notice of the matters Recipient contests setting forth in reasonable detail the nature and basis of such disagreement and the Recipient's proposed adjustment(s) (a "Dispute Notice") within 30 days after the delivery of the Certificate to Recipient and (ii) if the Dispute Notice relates to a matter which is common to all partners of an Exchanging Partnership rather than to a particular partner or partners of an Exchanging Partnership, it is signed by limited partners who held, immediately prior to the Recapitalization, in excess of 50% of the limited partnership interests therein and names a person who may act on behalf of all such limited partners to resolve such disagreement. If one or more Recipients timely provide Dispute Notices in accordance with the preceding sentence, the representatives of the Recipients providing the notice and IPO-Co shall meet promptly and attempt in good faith to resolve any differences. If such persons cannot mutually resolve such disagreement within 10 days after the date of the Dispute Notice, such dispute promptly shall be submitted for resolution to a recognizable and reputable certified public accounting firm that is mutually acceptable to IPO-Co and the Recipients providing the Dispute Notice. Such accounting firm promptly shall resolve the matters that are in disagreement among the parties with respect to the IPO-Co's Certificate as set forth in the Dispute Notice in accordance with the terms of the Plan of Recapitalization, and promptly shall deliver its determination in writing to IPO-Co and the Recipients who delivered such Dispute Notice. The fees and expenses of such accounting firm shall be borne by IPO-Co and such Recipients pro rata based on a fraction, the numerator of which shall be the difference between the adjustment that is awarded by such accounting firm from the adjustment set forth in the IPO-Co's Certificate as to the portion to be borne by IPO-Co and the difference between the adjustment that is awarded by such accounting firm from the adjustment set forth in the Dispute Notice as to the portion to be borne by the Recipients delivering such Dispute Notice (who shall bear such cost among themselves jointly and severally or in such fashion as they decide in writing among themselves). The denominator of such fraction shall be the difference between the adjustment set forth in IPO-Co's Certificate and the adjustment set forth in the Dispute Notice. The determination of such accounting firm shall be final, conclusive and binding upon the Recipients and IPO-Co. Any matter set forth in a Certificate as to which a Dispute Notice is not provided timely and in accordance with the first sentence of this Annex A-1 shall be determined on a final, conclusive and binding basis by the Certificate. Any matter set forth in a Certificate which is the subject of a Dispute Notice so delivered shall be determined on such a basis as provided in this Annex A-1. The matters set forth in the Calculation Certificate and the Collar Certificate, in each case once determined on a final, conclusive and binding basis are referred to herein as the "Final Calculation Certificate" and the "Final Collar Certificate" respectively. A-13 EX-2.2 4 a2050304zex-2_2.txt EXHIBIT 2.2 Exhibit 2.2 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD. AJAX LIMITED PARTNERSHIP THE LIMITED PARTNERS OF AJAX LIMITED PARTNERSHIP GENMAR AJAX LTD. as the sole stockholder of GENMAR AJAX CORPORATION PETER C. GEORGIOPOULOS as the sole stockholder of GMC ADMINISTRATION LTD. GENMAR AJAX CORPORATION as Managing General Partner of AJAX LIMITED PARTNERSHIP and GMC ADMINISTRATION LTD. as Administrative General Partner of AJAX LIMITED PARTNERSHIP Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), Ajax Limited Partnership, a Cayman Islands limited partnership (the "Partnership") by its Managing General Partner, the parties listed under the heading "LP Sellers" on the signature pages hereto (the "LP Sellers"), Peter C. Georgiopoulos, an individual with a business address of 35 West 56th Street New York, NY 10019 ("Georgiopoulos"), Genmar Ajax Ltd., a New York corporation ("MGP Stockholder") and together with Georgiopoulos and the LP Sellers, the "Sellers"), Genmar Ajax Corporation, a Marshall Islands corporation, in its capacity as Managing General Partner of the Partnership (the "Managing General Partner"), and GMC Administration Ltd., a Cayman Islands exempted company, in its capacity as Administrative General Partner of the Partnership (the "Administrative General Partner" and, together with the Managing General Partner, the "General Partners"). Purchaser, the Sellers, and the General Partners are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The LP Sellers are all of the limited partners of the Partnership and owners of all of the Interests (as hereinafter defined). B. Georgiopoulos owns, directly, all shares of the issued share capital (the "AGP Shares") of the Administrative General Partner and all shares of the outstanding capital stock of MGP Stockholder. C. MGP Stockholder owns, directly, all shares of the outstanding capital stock (the "MGP Shares", and together with the AGP Shares, the "General Partner Shares") of the Managing General Partner. D. The Partnership owns all of the issued and outstanding share capital of each entity listed in Schedule 1, (each an "SPV" and, together with the Partnership, the "Company") each of which owns a Vessel (as hereinafter defined). E. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, as further described in the Plan of Recapitalization. F. As part of the Recapitalization, Purchaser desires to exchange shares ("Purchaser Shares") of the common stock of Purchaser, par value $.01 per share (the "Purchaser Stock") for all of the Interests and General Partner Shares on the terms and conditions set forth herein and therein (the "Exchange"). G. OCM Ajax Investments, Inc. desires to distribute to OCM Principal Opportunities Fund L.P., its sole stockholder (the "Liquidating Seller Stockholder"), all of its respective assets, including its respective Purchaser Shares and thereafter liquidate (such liquidation together with the Exchange, the "Exchange and Liquidation"). H. The Parties intend that, for United States federal income tax purposes, (i) the Exchange will be treated as an "exchange" pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) the Exchange and Liquidation and the transfers of the MGP Shares will each be treated as a "reorganization" under Section 368(a) of the Code and this Agreement constitutes a "plan of reorganization." NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 Definitions 1.1 "AGP Shares" shall have the meaning set forth in Recital B. 1.2 "Balance Sheet" means the adjusted unaudited consolidated balance sheet of the Company as of March 31, 2001 previously delivered to Purchaser. 1.3 "Closing" means the closing of the transactions contemplated hereby. 1.4 "Closing Date" means the date on which the Closing occurs. 1.5 "Closing Opinion" has the meaning set forth in Section 3.9. 1.6 "Company" has the meaning set forth in Recital D. 1.7 "Contracts" has the meaning set forth in Section 4.10. 1.8 "Deed of Assignment and Adherence" means the Deed of Assignment and Adherence to be executed by each LP Seller, the Purchaser, the Administrative General Partner, and the Managing General Partner in substantially the form of Exhibit F. 1.9 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Sellers have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or the violation or alleged violation of any Environmental Law. 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or -2- in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. 1.13 "Escrow Agent" has the meaning assigned to such term in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Purchaser, the Sellers, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may reasonably be required by the Escrow Agent. 1.15 "Financial Statements" means the audited consolidated balance sheet and statements of earnings, partners' equity and cash flows of the Company as of, and for each of the fiscal years ended December 31, 2000, 1999, and 1998. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "General Partnership Shares" has the meaning set forth in Recital C. 1.18 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.20 "Indemnity Shares" means the Purchaser Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.21 "Interests" mean the limited partnership interests in the Partnership held by Limited Partners. 1.22 "Interim Financial Statements" means the unaudited consolidated financial statements of the Company as of, and for the period ended March 31, 2001 previously delivered to Purchaser. 1.23 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.24 "Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.25 "Licenses" has the meaning set forth in Section 4.14(b). -3- 1.26 "Limited Partner" means a limited partner of the Partnership. 1.27 "Lockup Agreement" means the Lockup Agreement executed by the Sellers regarding the Purchaser Shares in the form of Exhibit A. 1.28 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.29 "Majority in Interest" means LP Sellers holding a majority of the Interests. 1.30 "Management Rights Agreement" means the Management Rights Agreement by and between Purchaser and the Liquidating Seller Stockholder in the form of Exhibit G. 1.31 "MGP Shares" has the meaning set forth in Recital C. 1.32 "MGP Stockholder" has the meaning set forth in the preamble. 1.33 "Material Adverse Effect" means any material adverse effect on the Company's business, operations, assets, financial condition, liabilities, or results of operations or on the ability of any Seller to perform its obligations hereunder. 1.34 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.35 "Partner" means a General Partner or a Limited Partner. 1.36 "Partnership Agreement" means the Limited Partnership Agreement of the Partnership amended and restated as of January 1, 2000, as amended to date. 1.37 "Partnerships" means Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. 1.38 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. 1.39 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.40 "Purchaser Share" has the meaning set forth in Recital F. 1.41 "Purchaser Stock" has the meaning set forth in Recital F. -4- 1.42 "Registration Rights Agreement" means the Registration Rights Agreement by and among the Sellers, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit B. 1.43 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.44 "SPV" has the meaning set forth in Recital D. 1.45 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.46 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser, Lehman Brothers Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.47 "Vessel" means a motor tanker described in Schedule 2. 1.48 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Seller, substantially in the form of Exhibit C. 1.49 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Articles, Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Articles, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. ARTICLE 2 Exchange of Securities 2.1 Generally. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement -5- or made pursuant hereto, (a) each LP Seller with full title guarantee shall sell, assign, transfer and deliver absolutely by the execution and delivery of the Deed of Assignment and Adherence to Purchaser, and Purchaser shall purchase and accept from each LP Seller, all of such LP Seller's Interests and all of such LP Seller's rights, title, and interest in the Interests free and clear of all Encumbrances, (b) Georgiopoulos with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from Georgiopoulos all of the AGP Shares and all of Georgiopoulos' rights, title, and interest in the AGP Shares free and clear of all Encumbrances, and (c) MGP Stockholder with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from MGP Stockholder all of the MGP Shares and all of MGP Stockholder's rights, title, and interest in the MGP Shares free and clear of all Encumbrances in each case in exchange for the number of Purchaser Shares specified pursuant to Section 2.2. The obligations of the Sellers in this Section 2.1 are several, not joint. 2.2 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to each Seller in consideration of the sale, assignment, transfer, and delivery of all Interests and General Partner Shares to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference and made a part hereof. Purchaser shall deposit 10% of the Purchaser Shares to which the Sellers are entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Purchaser shall deposit an additional 10% of the total number of Purchaser Shares to which each Seller is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against a Seller under Section 14.2 within six months after the Closing, Purchaser shall instruct the Escrow Agent to release such Indemnity Shares to the Sellers entitled to them in accordance with the Plan of Recapitalization. Purchaser shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the relevant Seller to the extent Purchaser and such Seller or a court of competent jurisdiction finally resolves such claim in favor of such Seller without the possibility of appeal. Purchaser shall deposit an additional number of Purchaser Shares equal to the number of Collar Shares specified in Section 9(C)(vi)(a) of the Plan of Recapitalization in escrow in the Collar Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. 2.3 Substituted Partner. Each LP Seller in its capacity as a Limited Partner of the Partnership hereby (a) confirms and acknowledges its intention that the Purchaser or its assignees be admitted to the Partnership as a substituted Limited Partner of the Partnership, (b) gives its consent to the sale and transfer of the Interests to Purchaser and such admission, and (c) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred hereunder. Each LP Seller acknowledges and agrees that it will cease to be a partner of the Partnership as of the Closing. The Purchaser and its assignees agree that so long as any of them is a partner of the Partnership, such partner shall be bound by all of the terms and provisions of the Partnership Agreement as it shall be amended from time to time to the same extent and in the same manner as if the Purchaser or its assignees had been an original party to the Partnership Agreement in place of each LP Seller. -6- 2.4 Administrative General Partner Consents. The Administrative General Partner, in its capacity as such, hereby (a) gives its consent to the sale and transfer of the Interests to Purchaser and to Purchaser's admission as a substituted limited partner of the Partnership, (b) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred under this Agreement, (c) waives any requirement under the Partnership Agreement that an opinion of counsel be delivered in connection with the sale and transfer of the Interests under this Agreement, and (d) other than execution of the Deed of Assignment and Adherence, agrees that no representations or other instruments of assignment are required by the Administrative General Partner for the sale and transfer of the Interests to Purchaser and Purchaser's admission as a limited partner of the Partnership other than as set forth in this Agreement, including the Exhibits hereto. 2.5 Fees and Expenses. Purchaser shall pay all reasonable legal fees and other expenses incurred by the Partnership in connection with Purchaser's substitution as a limited partner. ARTICLE 3 Closing The Closing shall be held at the Recapitalization Closing Time (as defined in the Plan of Recapitalization) at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022. The following shall take place at the Closing: 3.1 Transfer of Interests and Admission of Purchaser as Limited Partner. The transfer of all Interests to Purchaser and the admission of Purchaser as a Limited Partner shall be reflected in the Register of Partnership Interests on the books and records of the Partnership. 3.2 Delivery of Stock and Share Certificates. Georgiopoulos shall deliver or cause to be delivered to Purchaser share certificates representing all the equity interests of the Administrative General Partner (including all issued and outstanding AGP Shares), and MGP Stockholder shall deliver or cause to be delivered to Purchaser stock certificates representing all the equity interests of the Managing General Partner (including all issued and outstanding MGP Shares) accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer. 3.3 Delivery of Purchaser Shares. Purchaser shall deliver to the Escrow Agent certificates representing all of the Purchaser Shares to be issued hereunder. 3.4 Delivery of Schedule of Purchaser Shares. Purchaser shall deliver to the Partners a schedule reflecting issued and outstanding capital stock of Purchaser as of the Closing including the number of Purchaser Shares to be delivered to the Sellers and the number of Purchaser Shares delivered to the various escrow accounts for the benefit of each Seller as more particularly described in the Plan of Recapitalization. 3.5 Resignation of Directors and Officers of General Partners. The directors and officers of the General Partners shall resign as of the Closing, and Purchaser shall be entitled to designate their replacements. -7- 3.6 Lockup Agreement. The Sellers shall execute and deliver to Purchaser the Lockup Agreement. 3.7 Registration Rights Agreement. The Sellers and Purchaser shall execute and deliver the Registration Rights Agreement. 3.8 Legal Opinion. Marshall Islands counsel for the Purchaser shall deliver to the Sellers an opinion containing substantially the items set forth in Exhibit D in a form reasonably acceptable to counsel to the Liquidating Seller Stockholder (the "Closing Opinion"). 3.9 Deed of Assignment and Adherence. Each LP Seller and Purchaser shall execute and deliver the Deed of Assignment and Adherence. 3.10 Transfer Taxes. The Purchaser shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the Interests (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the Interests. ARTICLE 4 Representations and Warranties of the Partnership The Partnership hereby represents and warrants to Purchaser as follows: 4.1 Organization and Good Standing of Partnership. The Partnership is a partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands. The Partnership has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Partnership is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Copies of the certificate of registration of exempted limited partnership, each annual return and declaration of the Partnership since its formation, and the Partnership Agreement and all amendments thereto have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the Partners of the Partnership and all other records regarding the governance or ownership of the Partnership have been made available to Purchaser and are true, complete and accurate in all material respects. Other than the SPVs listed in Schedule 1, the Partnership has no subsidiaries and does not own any equity interest in any Person whatsoever. 4.2 Organization and Good Standing of SPVs. Each SPV is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not be reasonably likely to have a Material Adverse Effect. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to -8- Purchaser and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. 4.3 Capitalization, Title. (a) The total issued and outstanding equity of the Partnership consists of the Interests plus the interests of the Managing General Partner and the Administrative General Partner as set forth in Section 4.3(a) of the Disclosure Schedule. The aggregate capital contribution amount set forth in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. (b) The authorized capital and number of outstanding shares of capital of each SPV (the "SPV Shares") are as set forth in Section 4.3(b) of the Disclosure Schedule. All SPV Shares are validly issued and outstanding, fully paid, and non-assessable. The Partnership owns, beneficially and of record, and has good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from the Partnership of any SPV shares. (c) Except as set forth in the Partnership Agreement, there are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any equity of the Company or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of the Company or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of the Company. Except as set forth in the Partnership Agreement, there are no outstanding agreements among partners or members, registration rights agreements, or rights of first refusal pertaining to the Company's equity interests. None of the outstanding equity securities of the Company has been issued in violation of any rights of any Person or in violation of any Law. 4.4 Authorization; Enforceability. The execution and delivery of this Agreement by the Partnership has been duly authorized by all necessary partnership action required on the part of the Partnership. This Agreement has been duly executed and delivered by the Managing General Partner on behalf of the Partnership and constitutes the legal, valid, and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 4.5 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the certificate of registration of exempted limited partnership of the Partnership or the Partnership Agreement, any resolutions of the Partners of the Partnership, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of the Partnership or any SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any -9- obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Partnership or any SPV under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Partnership or any SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Partnership, any SPV, or their respective properties. 4.6 Financial Statements; Undisclosed Liabilities. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Purchaser) have been prepared from the books and records of the Company on a consistent basis (and, in the case of the Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as at their respective dates and the results of operations (and, in the case of the Financial Statements, the cash flows) of the Company for the periods covered thereby. (b) As of the date of the Balance Sheet, other than those set forth in Section 4.6(b) of the Disclosure Schedule, the Company had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise and, in the case of any such liabilities, debts, or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of the Balance Sheet, the Company has conducted its businesses in the ordinary course consistent with past practice and has not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of the Balance Sheet, there has been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities or results of operations of the Company (other than general economic or industry conditions), and, to the actual knowledge of the General Partners and the Sellers, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. 4.7 Receivables and Payables. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.8 Taxes. (a) Except as set forth in Section 4.8(a) of the Disclosure Schedule, the Company has timely filed with the appropriate taxing authorities all material Returns required to be filed by it (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely -10- basis all Taxes (whether or not shown on any Return) due and payable as determined on the basis of Tax Law as in effect as of the date hereof, except for Taxes (i) which the Company believes in good faith are not due and payable because they are being diligently contested by appropriate proceedings, (ii) for which the Company has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. (b) Except as set forth in Section 4.8(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to the Company for any Pre-Closing Period, and there are no pending or, to the Seller Parties' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of the Company. No extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. (c) The Company has made provision on the Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.8(c) (ii) of the Disclosure Schedule, the Company is not liable for Taxes of any other Person, and is neither currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Returns that the Company is or may be subject to taxation by that jurisdiction; and (iv) the Company has not filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person (except that the Partnership and the SPVs are treated as a single entity for U.S. federal income tax purposes). 4.9 Title to Properties; Absence of Encumbrances. (a) The Company does not own or lease any real property. (b) Except as set forth in Section 4.9(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in Schedule 2, and has either good title to or a valid leasehold, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on the Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by the Company is subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 Contracts. Each oral or written agreement to which the Partnership or any SPV is a party and which is material to the business of the Company as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by the Partnership or such SPV, as applicable, in accordance with its terms, except as such -11- enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, the Partnership and each SPV are in compliance and are not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which either of them is a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the actual knowledge of the General Partners and the Sellers, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the Disclosure Schedule, to the General Partner's knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified the Partnership or any SPV of any unresolved complaint regarding the performance of the Partnership or any SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, neither the Partnership nor any SPV has received any notice of any termination or non-renewal of any Contract and, to the actual knowledge of the General Partners and the Sellers, no other party to any Contract intends to terminate or not renew any such Contract. 4.11 Insurance. Each insurance policy currently maintained by the Partnership or an SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 Litigation. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the actual knowledge of the General Partners and the Sellers, threatened against the Partnership or any SPV or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV is identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 4.13 Environmental Matters. Except as would not be reasonably likely to have a Material Adverse Effect: (a) except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the Company are in compliance with applicable Environmental Laws which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof and the Company has not received any written notice of any violation of any Environmental Law; -12- (b) except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Seller Parties' knowledge, threatened against the Partnership, any SPV, or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed; and (c) except as set forth on Section 4.13(c) of the Disclosure Schedule, to the actual knowledge of the General Partners and Sellers, there are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Partnership, any SPV, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed. 4.14 Compliance with Law. (a) Except as would not be reasonably likely to have a Material Adverse Effect, the Company is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. The Company has not received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) the Company has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to the actual knowledge of the General Partners and the Sellers, threatened seeking the revocation or limitation of any such License. 4.15 Employees. The Company does not now have, nor has it since the date of its formation had, any employees. 4.16 Books and Records. The books and records of the Company with respect to the Company, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. ARTICLE 5 Representations and Warranties of each Seller Each Seller, severally and not jointly hereby represents and warrants to Purchaser as follows (provided that (a) the Liquidating Seller Stockholder shall be deemed a Seller for purposes of this Article 5 and (b) OCM Ajax Investments, Inc. and the Liquidating Seller Stockholder are representing and warranting to Purchaser jointly and severally as between them only): -13- 5.1 Authorization; Enforceability. If such Seller is an individual, he or she has full legal capacity to enter into and carry out his or her obligations under this Agreement. If such Seller is not an individual, such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and the execution and delivery of this Agreement by such Seller have been duly authorized by all necessary corporate or analogous action. This Agreement has been duly executed and delivered by such Seller and constitutes the legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 5.2 No Conflicts. Neither the execution and delivery by such Seller of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate such Seller's certificate of incorporation, by-laws, or analogous constitutive or governing documents, or any resolutions of the board of directors of such Seller or person(s) exercising analogous powers, or (b) except as would not be reasonably likely to have a material adverse effect on such Seller's ability to consummate the transactions contemplated hereby, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of such Seller under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which such Seller is a party or by which any of its properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over such Seller or its properties. 5.3 Investment Purpose; Private Placement. (a) Such Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. In addition, except (i) as otherwise previously disclosed to the Purchaser in writing before the date of this Agreement, (ii) with respect to the potential sale by the Sellers in the overallotment option in connection with Purchaser's initial public offering or (iii) as set forth in Recital G, the Sellers are not under a binding commitment or obligation to sell, transfer, or otherwise dispose of the Purchaser Shares to be acquired by such Sellers pursuant to this Agreement. Notwithstanding the foregoing, each Seller has, subject to the Lockup Agreement, the right at all times to sell or otherwise dispose of all or any part of the Purchaser Shares pursuant to a registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and the right to dispose of its Purchaser Shares is within his, her or its control. (b) Such Seller acknowledges that the issuance of the Purchaser Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Such Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. -14- (c) Such Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. (d) Such Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (e) Such Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Such Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by such Seller have been made available to such Seller and the persons that such Seller has retained to advise it with respect to such an acquisition, and that such Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) Such Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax considerations of an investment in the Purchaser Shares. Such Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Purchaser Shares. Such Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Article 8 or on any representations of any officer, director, employee, founder or agent of Purchaser. ARTICLE 6 Representations and Warranties of each LP Seller Each LP Seller, severally and not jointly, hereby represents and warrants to Purchaser as follows: 6.1 Title. The aggregate capital contribution amount set forth opposite such LP Seller's name in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. Such LP Seller has good, valid, and marketable title to and, subject to the terms of the Partnership Agreement, the right to transfer to Purchaser, all of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. At the Closing, such LP Seller will convey ownership of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. Subject to the terms of the Partnership Agreement, no Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from such LP Seller of any Interests. ARTICLE 7 Representations and Warranties of Georgiopoulos Georgiopoulos hereby represents and warrants to Purchaser as follows: -15- 7.1 Capitalization; Title. The authorized capital of the Administrative General Partner consists of 50,000 shares, par value $1.00 per share, of which 1,000 shares are outstanding. All AGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Administrative General Partner has good, valid, and marketable title to all of the Interests the Administrative General Partner owns, free and clear of any and all Encumbrances. Georgiopoulos owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the AGP Shares, free and clear of any and all Encumbrances. At the Closing, Georgiopoulos will convey ownership of the AGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Georgiopoulos of any AGP Shares. 7.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the memorandum of association or articles of association of the Administrative General Partner or any resolutions of the directors or members of the Administrative General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Administrative General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Administrative General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Administrative General Partner or its properties. 7.3 Financial Condition. The Administrative General Partner has conducted no business other than serving as administrative general partner of Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as administrative general partner for the benefit of the Partnership in the Administrative General Partner's good faith judgment. ARTICLE 8 Representations and Warranties of MGP Stockholder MGP Stockholder hereby represents and warrants to Purchaser as follows: 8.1 Capitalization; Title. (a) The authorized capital of the Managing General Partner consists of 500 shares of stock, without par value, of which 100 shares are outstanding. All MGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Managing General Partner has good, valid, and marketable title to all of the Interests the Managing General Partner owns, free and clear of any and all Encumbrances. MGP Stockholder owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the MGP Shares, free and clear of any and all Encumbrances. At the Closing, MGP -16- Stockholder will convey ownership of the MGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from MGP Stockholder of any MGP Shares. 8.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the articles of incorporation or by-laws of the Managing General Partner or any resolutions of the directors or members of the Managing General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Managing General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Managing General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over Managing General Partner or its properties. 8.3 Financial Condition. The Managing General Partner has conducted no business other than serving as managing general partner of the Partnership and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as managing general partner for the benefit of the Partnership in the Managing General Partner's good faith judgment. ARTICLE 9 Representations and Warranties of Purchaser Purchaser represents and warrants to the Sellers as follows: 9.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 9.2 Capitalization. The authorized capital of the Purchaser consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following the Closing the outstanding capital stock of the Purchaser shall be as set forth in the schedule delivered pursuant to Section 3.4. 9.3 Authorization. The execution and delivery of this Agreement by Purchaser have been duly authorized by all necessary corporate action required on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, -17- except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 9.4 No Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict with or violate the Certificate of Incorporation or By-Laws of Purchaser, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Purchaser (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Purchaser to consummate the transactions contemplated hereby). 9.5 Litigation. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Purchaser, threatened against Purchaser or any of its properties or assets, or any director, officer or employee of Purchaser in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 9.6 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 9.7 Private Placement Purchaser is acquiring the Interests and the GP Shares solely for the purpose of ownership (directly or indirectly) of the Partnership as a whole for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Purchaser acknowledges that the Interests and the GP Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Purchaser acknowledges that the Interests and the GP Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. 9.8 Contribution Agreements. Each Contribution Agreement that Purchaser is entering into pursuant to the Plan of Recapitalization with partners of the Exchanging Partnerships (as defined in the Plan of Recapitalization) is substantially similar to this Agreement and contains substantially the same economic and legal terms. 9.9 No Reacquisition. Except as provided for hereunder or under the Plan of Recapitalization, the Purchaser has no plan or intention to reacquire any of the Purchaser Shares issued hereunder to OCM Ajax Investments, Inc. from OCM Ajax Investments, Inc. or the Liquidating Seller Stockholder. -18- 9.10 No Transfers. Purchaser has no plan or intention to sell, transfer, or otherwise dispose of any of the Interests acquired hereunder, other than as permitted under Section 368(a)(2)(C) of the Code and Treasury Regulation ss.1.368-1. 9.11 Investment Company. Purchaser is not an "investment company" as defined in Section 368(a)(2)(F) of the Code. 9.12 No Assumption of Liabilities. Purchaser will not acquire any of the liabilities of OCM Ajax Investments, Inc. 9.13 Liquidating Seller Stockholder. For purposes of this Article 9, the Liquidating Seller Stockholder shall be deemed to be a Seller. ARTICLE 10 Covenants The Parties hereby covenant and agree as follows: 10.1 Conduct of Business. From the date hereof until the Closing, each of the Company and the General Partners will conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Purchaser: (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.3(b) with respect to, any Interests or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any Seller or general partner of the Partnership; (e) redeem, purchase or otherwise acquire, directly or indirectly, any Interest; or (f) enter into any commitment to do any of the foregoing. 10.2 No Solicitation of Alternative Transaction. For a period of one hundred and eighty (180) days following the date hereof, the Sellers shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Partnership, any general partner of the Partnership, any SPV, or their assets or business, in whole or in part, whether through a tender offer -19- (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Partnership or any SPV (collectively, "Acquisition Proposals"). The Sellers shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. Notwithstanding the foregoing, any Seller who is in material breach of any representation warranty, covenant, or agreement hereunder shall be bound by this Section 10.2 regardless of the expiration of such one hundred eighty (180) day period. 10.3 Taxes and Cooperation on Tax Matters. (a) Tax Returns; Liability for Taxes. (1) At the Managing General Partner's election, the Managing General Partner shall be responsible for and shall have the ultimate discretion with respect to, all Returns required or permitted by applicable law to be filed by the Managing General Partner with respect to the Company for all taxable periods that end on or before the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Purchaser (which approval shall not be unreasonably withheld). If the Managing General Partner does not elect to prepare and file such Returns, the Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, such Returns; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall no be unreasonably withheld). (2) The Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, all Returns required to be filed by the Company for all taxable periods that begin before and end after the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall not be unreasonably withheld). (3) The Purchaser shall be responsible for, and shall have ultimate discretion with respect to, all Returns required to be filed by the Company for taxable periods that begin on or after the Closing Date. (4) All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of Returns of the Company (whether filed and prepared by the Managing General Partner or the Purchaser) shall be the responsibility of the Company. (5) Purchaser shall be liable and shall indemnify the Sellers for any and all Taxes imposed on the Company (but not the Sellers) for which the Sellers are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 10.3(a)(5) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any -20- tax benefit (e.g., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). (6) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Purchaser, the Company, or the Sellers under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the Interests. (7) The Sellers shall notify Purchaser in writing of, and keep Purchaser fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Purchaser has indemnified the Sellers pursuant to this Section 9.03(a). Purchaser may control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Sellers informed on a current basis of the status of any such proceedings and (b) the Sellers and their counsel have the right to participate, at the Sellers' expense, in any such proceeding. The Sellers shall not settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Purchaser, which consent may not be unreasonably withheld. (b) New Elections. No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Company which may have an effect on the Company for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Purchaser. (c) Cooperation. (1) Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 10.3 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Sellers (before the Closing) and Purchaser (after the Closing) shall each cause the Company (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Sellers, as the case may be, shall allow the other party to take possession of such books and records. (2) Purchaser and the Sellers further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Purchaser or the Sellers. -21- 10.4 Execution of Documents. Each Seller shall execute and deliver to Purchaser the Registration Rights Agreement and the Lockup Agreement. The Purchaser shall execute and deliver to each Seller the Registration Rights Agreement. 10.5 HSR Act. The Sellers and Purchaser shall make all filings, cooperate fully with respect to all filings required by Sellers and Purchaser, and shall take any other actions required under the HSR Act with respect to the transactions contemplated hereunder. 10.6 Further Assurances. The Partnership and the Sellers agree to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Purchaser agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as the Partnership and the Sellers may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof 10.7 Restrictions on Securities Each Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend and that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." 10.8 Continuance of Business of the Partnerships. The Purchaser shall continue the historic business of the Partnerships or use a significant portion of the Partnerships' historic business assets in a business. 10.9 Overallotment Sales. If the LP Sellers have the opportunity to sell Purchaser Shares in the underwriters' overallotment option in the Purchaser's initial public offering, then at the closing of the issuance of any Purchaser Shares pursuant to such overallotment option, Purchaser shall make substantially similar representations and warranties to such selling LP Sellers as Purchaser makes to the underwriters and obtain for such selling LP Sellers an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling LP Sellers' use in their diligence review for sale under such overallotment option; provided, however, that such selling LP Sellers shall provide any information or materials reasonably requested by such accountants and counsel. 10.10 Failure to Close Initial Public Offering. After the Closing Date, in the event that the sale of Purchaser's Common Stock pursuant to the Underwriting Agreement does not close, -22- (a) Peter Georgiopoulos will be the Chief Executive Officer of Purchaser pursuant to a previously negotiated employment agreement, (b) Purchaser will promptly call a meeting of stockholders for the purpose of electing a board of directors, and (c) the Sellers will negotiate in good faith to create appropriate corporate governance and stockholder arrangements that (x) will include tag-along rights and drag-along rights, (y) may include rights of first refusal, preemptive rights, and registration rights, and (z) will include limitations on affiliate transactions, in each case, the terms of which will be negotiated among the parties. 10.11 Liquidating Seller Stockholder. For purposes of this Article 10, the Liquidating Seller Stockholder shall be deemed to be a Seller. ARTICLE 11 Conditions Precedent to Obligations of Purchaser The obligations of Purchaser under Article 2 and Article 3 and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 11.1 Representations and Warranties. Each and every representation and warranty of the Sellers and the Partnership contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 11.2 Compliance with Covenants. The Sellers and the Company shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. 11.3 Lack of Adverse Change. Since the date of the Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 11.4 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 11.5 Consents of Third Parties. All material consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 11.6 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, -23- decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 11.7 Lockup Agreement. The Sellers shall have executed and delivered to Purchaser the Lockup Agreement. 11.8 Registration Rights Agreement. The Sellers shall have executed and delivered to Purchaser the Registration Rights Agreement. 11.9 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 11.10 Waiver and Contribution Agreement. Each Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. 11.11 Deed of Assignment and Adherence. Each LP Seller shall have executed and delivered to Purchaser the Deed of Assignment and Adherence. 11.12 Escrow Agreement. Each Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement. 11.13 Customary Closing Documents. Purchaser shall have received such other customary closing documents as Purchaser or its counsel may reasonably request (other than legal opinions). ARTICLE 12 Conditions Precedent to Obligations of the Sellers The obligations of the Sellers under Article 2 and Article 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Sellers: 12.1 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality -24- (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 12.2 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 12.3 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 12.4 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 12.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of the Sellers, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to the Sellers. 12.6 Registration Rights Agreement. Purchaser shall have executed and delivered to the Sellers the Registration Rights Agreement. 12.7 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 12.8 Deed of Assignment and Adherence. Purchaser shall have executed and delivered to each LP Seller the Deed of Assignment and Adherence. 12.9 Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement. 12.10 Closing Opinion. The Sellers shall have received the Closing Opinion. 12.11 Management Rights Agreement. Purchaser and the Liquidating Seller Stockholder shall have entered into the Management Rights Agreement. 12.12 Customary Closing Documents. Sellers shall have received such other customary closing documents as Sellers or their counsel may reasonably request (other than legal opinions in addition to the Closing Opinion). -25- ARTICLE 13 Termination of Agreement 13.1 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and a Majority in Interest; (b) by Purchaser or a Majority in Interest, if the Closing shall not have been consummated by 180 days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party or Parties seeking to terminate this Agreement; or (c) by Purchaser on the one hand, or a Majority in Interest or Georgiopoulos on the other hand, if any Seller or Purchaser, respectively, fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 13.1(c) if it is also in material breach of any provision of this Agreement. 13.2 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and the Sellers shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Article 14 and Article 15 shall survive any termination of this Agreement. ARTICLE 14 Remedies 14.1 Survival. The representations and warranties of each Seller in Sections 5.1, 6.1, 7.1, and Section 8.1 and Purchaser in Sections 9.1 through 9.3 shall survive the Closing for a period of eighteen months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period alleging breach thereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The representations and warranties of Purchaser in Sections 9.9, 9.10, 9.11, and 9.12 shall not survive the Closing. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial six-month period alleging breach hereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely, except that the covenant set forth in Section 10.8 shall survive for only one year. 14.2 Indemnification by Sellers. (a) Each Seller shall, severally and not jointly, indemnify and hold harmless Purchaser, the Company, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred -26- or suffered by such Person as a result of, arising from or in connection with (i) a breach by such Seller of any representation, warranty, or covenant made by such Seller in this Agreement or (ii) a breach by the Partnership of any representation, warranty, or covenant made by the Partnership in this Agreement in favor of Purchaser, in each case solely to the extent provided in Section 14.2(b) but subject to the exceptions in Section 14.2(d). (b) Except for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(i) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares allocable to such Seller equal to the amount of the applicable Loss divided by the IPO Price until the number of Indemnity Shares allocable to such Seller equals zero. Each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(ii) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price (in accordance with Section 9(D) of the Plan of Recapitalization) until the total number of Indemnity Shares equals zero. If any Indemnity Shares remain after the return thereof pursuant to the preceding sentences, such Indemnity Shares shall be re-allocated among the Sellers in accordance with the Plan of Recapitalization. Any fractional shares among such Indemnity Shares subject to release from escrow under this Section 14.2(b) shall be subject to Section 7 of the Plan of Recapitalization. (c) With respect to indemnification for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, Purchaser shall first instruct the Escrow Agent to return to it Indemnity Shares allocable to such Seller in accordance with the first sentence of this Section 14.2(b). To the extent such return in Indemnity Shares does not fully offset the Loss, such Seller shall satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the remainder of the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to such Seller. To the extent such Seller and its affiliate transferees no longer owns Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, such Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any Seller be required to return to Purchaser more than such Seller's Purchaser Shares (or the cash equivalent of such Purchaser Shares based on the IPO Price if such Seller no longer owns such Purchaser Shares). (d) The remedies provided in this Section 14.2 are the exclusive remedy of the Purchaser with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 14.2 shall prohibit Purchaser from seeking specific performance or injunctive relief against any Seller or the Partnership in respect of a breach by such Seller or the Partnership of any covenant hereunder; and further provided, that nothing in this Section 14.2 shall limit Purchaser's remedies for a breach of covenant occurring prior to the Closing. -27- 14.3 Indemnification by Purchaser. (a) Purchaser shall indemnify and hold harmless each Seller and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Purchaser of any representation, warranty, or covenant made by Purchaser in this Agreement, in each case solely to the extent provided in Section 14.3(b). (b) Purchaser's sole obligation and each Seller's sole remedy for a breach by Purchaser of a representation, warranty, or covenant hereunder shall be for Purchaser to pay such Seller the amount of such Seller's Loss in cash; provided that Purchaser's total obligations under this Section 14.3 shall in no event exceed the aggregate value of the Interests and the General Partner Shares; provided, however, that nothing in this Section 14.3(b) shall prohibit such Seller from seeking specific performance or injunctive relief against Purchaser in respect of a breach by Purchaser of any covenant hereunder; and further provided, that nothing in this Section 14.3(b) shall limit such Seller's remedies for a breach of covenant occurring prior to the Closing. 14.4 Liquidating Seller Stockholder. For purposes of this Article 14, the Liquidating Seller Stockholder shall be deemed to be a Seller. ARTICLE 15 Miscellaneous 15.1 Limited Partners. The Parties acknowledge and agree that the LP Sellers are acting in all matters with respect to the Partnership hereunder as limited partners. 15.2 Expenses. Except as set forth in Section 15.3, each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including fees of brokers, finders, advisers, attorneys, and accountants; provided that Purchaser shall pay the fees of U.S., Cayman Islands and Marshall Islands counsel to OCM Ajax Investments, Inc. 15.3 HSR Expenses. The Partnerships shall bear all expenses pro rata relating to filings in compliance with the HSR Act to be made in respect of the transactions contemplated hereunder; provided that Purchaser shall bear all such expenses if Purchaser completes the IPO (as defined in the Plan of Recapitalization). 15.4 Entirety of Agreement. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all representations, warranties, covenants, and agreements which have induced this Agreement. 15.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): -28- (a) If to Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to an LP Seller, to such LP Seller and its legal representative using the contact information set forth below such LP Seller's signature on the signature pages hereto. (c) If to Georgiopoulos or MGP Stockholder: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 15.6 No Exclusion of Vessels. If this Agreement relates to a Partnership that owns more than one Vessel, Purchaser shall have no right hereunder to close as to one or more such Vessels and exclude one or more other Vessels from the Partnership in connection with the transactions contemplated hereunder without amendment to the Agreement pursuant to Section 15.7. In addition, this Agreement may not be terminated except in accordance with Section 13.1. 15.7 Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by Purchaser, the Partnership, a Majority in Interest, and Georgiopoulos. 15.8 Waiver. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. -29- 15.9 Assignment; Binding Nature; No Beneficiaries. This Agreement may not be assigned by any Party without the prior written consent of Purchaser, a Majority in Interest, and Georgiopoulos; provided, however, that Purchaser may assign its rights hereunder to any direct or indirect wholly-owned subsidiary of Purchaser which assumes the obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations, and further provided, that consideration provided for by Article 2 shall in any event be issued in shares of the original Purchaser hereunder which shall be the entity that sells shares to the underwriters pursuant to the Underwriting Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 15.10 Severability. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 15.11 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15.12 Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. 15.13 Negotiated Agreement. Purchaser and the Sellers acknowledge that they have been advised to seek advice of their own counsel, the language chosen by the Parties hereto expresses their mutual intent, and they accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. 15.14 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 15.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. -30- 15.16 Execution and Delivery. This Agreement may be executed in two or more 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. 15.17 Consent and Waiver to Certain Assignments of Partnership Interests. If the Partnership is named on Schedule 3, each LP Seller and each General Partner hereby (i) consents to the assignments of partnership interests contemplated by the assignments of partnership interests under any of the agreements listed in Schedule 3 (the "Assignments") and (ii) waives all its rights and interests under Section 9.01 of the limited partnership agreements of the Partnerships with respect to such assignments of partnership interests. [The remainder of this page has intentionally been left blank.] -31- IN WITNESS WHEREOF, all of the Parties hereto have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer AJAX LIMITED PARTNERSHIP By GENMAR Ajax Corporation, its Managing General Partner By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: [SIGNATURES OF LIMITED PARTNERS] PETER C. GEORGIOPOULOS in his individual capacity Witness: /s/ Peter C. Georgiopoulos /s/ Lambrini Hilias - -------------------------- -------------------------------- Printed Name: Lambrini Hilias -32- GENMAR AJAX LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GENMAR AJAX CORPORATION in its capacity as Managing General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GMC ADMINISTRATION LTD. in its capacity as Administrative General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: -33- LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A -- Lockup Agreement Exhibit B -- Registration Rights Agreement Exhibit C -- Waiver and Contribution Agreement Exhibit D -- Closing Opinion DISCLOSURE SCHEDULE: Schedule 4.3(a) -- Capitalization; Title Schedule 4.3(b) -- Capitalization; Title (cont'd) Schedule 4.6(b) -- Financial Statements; Undisclosed Liabilities Schedule 4.8(a) -- Taxes Schedule 4.8(b) -- Taxes (cont'd) Schedule 4.8(c) -- Taxes (cont'd) Schedule 4.9(b) -- Title to Properties; Absence of Encumbrances Schedule 4.10 -- Contracts Schedule 4.12 -- Litigation Schedule 4.13(a) -- Environmental Matters Schedule 4.13(b) -- Environmental Matters (cont'd) Schedule 4.13(c) -- Environmental Matters (cont'd) SCHEDULES: Schedule 1 -- SPVs Schedule 2 -- Vessels Schedule 3 -- Certain Assignments of Partnership Interests - --------------- * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.3 5 a2050304zex-2_3.txt EXHIBIT 2.3 Exhibit 2.3 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD. AJAX II, L.P. THE LIMITED PARTNERS OF AJAX II, L.P. AJAX II LLC as the sole stockholder of GENMAR AJAX II CORPORATION PETER C. GEORGIOPOULOS as the sole stockholder of GMC ADMINISTRATION LTD. GENMAR AJAX II CORPORATION as Managing General Partner of AJAX II, L.P. and GMC ADMINISTRATION LTD. as Administrative General Partner of AJAX II, L.P. Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), Ajax II, L.P., a Cayman Islands limited partnership (the "Partnership") by its Managing General Partner, the parties listed under the heading "LP Sellers" on the signature pages hereto (the "LP Sellers"), Peter C. Georgiopoulos, an individual with a business address of 35 West 56th Street New York, NY 10019 ("Georgiopoulos"), Ajax II LLC, a Delaware limited liability company ("MGP Stockholder") and together with Georgiopoulos and the LP Sellers, the "Sellers"), Genmar Ajax II Corporation, a Marshall Islands corporation, in its capacity as Managing General Partner of the Partnership (the "Managing General Partner"), and GMC Administration Ltd., a Cayman Islands exempted company, in its capacity as Administrative General Partner of the Partnership (the "Administrative General Partner" and, together with the Managing General Partner, the "General Partners"). Purchaser, the Sellers, and the General Partners are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The LP Sellers are all of the limited partners of the Partnership and owners of all of the Interests (as hereinafter defined). B. Georgiopoulos owns, directly, all shares of the issued share capital (the "AGP Shares") of the Administrative General Partner and all shares of the outstanding capital stock of MGP Stockholder. C. MGP Stockholder owns, directly, all shares of the outstanding capital stock (the "MGP Shares", and together with the AGP Shares, the "General Partner Shares") of the Managing General Partner. D. The Partnership owns all of the issued and outstanding share capital of each entity listed in Schedule 1, (each an "SPV" and, together with the Partnership, the "Company") each of which owns a Vessel (as hereinafter defined). E. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, as further described in the Plan of Recapitalization. F. As part of the Recapitalization, Purchaser desires to exchange shares ("Purchaser Shares") of the common stock of Purchaser, par value $.01 per share (the "Purchaser Stock") for all of the Interests and General Partner Shares on the terms and conditions set forth herein and therein (the "Exchange"). G. OCM Ajax Investments, Inc. desires to distribute to OCM Principal Opportunities Fund L.P., its sole stockholder (the "Liquidating Seller Stockholder"), all of its respective assets, including its respective Purchaser Shares and thereafter liquidate (such liquidation together with the Exchange, the "Exchange and Liquidation"). H. The Parties intend that, for United States federal income tax purposes, (i) the Exchange will be treated as an "exchange" pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) the Exchange and Liquidation and the transfers of the MGP Shares will each be treated as a "reorganization" under Section 368(a) of the Code and this Agreement constitutes a "plan of reorganization." NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 Definitions 1.1 "AGP Shares" shall have the meaning set forth in Recital B. 1.2 "Balance Sheet" means the adjusted unaudited consolidated balance sheet of the Company as of March 31, 2001 previously delivered to Purchaser. 1.3 "Closing" means the closing of the transactions contemplated hereby. 1.4 "Closing Date" means the date on which the Closing occurs. 1.5 "Closing Opinion" has the meaning set forth in Section 3.9. 1.6 "Company" has the meaning set forth in Recital D. 1.7 "Contracts" has the meaning set forth in Section 4.10. 1.8 "Deed of Assignment and Adherence" means the Deed of Assignment and Adherence to be executed by each LP Seller, the Purchaser, the Administrative General Partner, and the Managing General Partner in substantially the form of Exhibit F. 1.9 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Sellers have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or the violation or alleged violation of any Environmental Law. -2- 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. 1.13 "Escrow Agent" has the meaning assigned to such term in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Purchaser, the Sellers, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may reasonably be required by the Escrow Agent. 1.15 "Financial Statements" means the audited consolidated balance sheet and statements of earnings, partners' equity and cash flows of the Company as of, and for each of the fiscal years ended December 31, 2000 and 1999. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "General Partnership Shares" has the meaning set forth in Recital C. 1.18 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.20 "Indemnity Shares" means the Purchaser Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.21 "Interests" mean the limited partnership interests in the Partnership held by Limited Partners. 1.22 "Interim Financial Statements" means the unaudited consolidated financial statements of the Company as of, and for the period ended March 31, 2001 previously delivered to Purchaser. 1.23 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. -3- 1.24 "Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.25 "Licenses" has the meaning set forth in Section 4.14(b). 1.26 "Limited Partner" means a limited partner of the Partnership. 1.27 "Lockup Agreement" means the Lockup Agreement executed by the Sellers regarding the Purchaser Shares in the form of Exhibit A. 1.28 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.29 "Majority in Interest" means LP Sellers holding a majority of the Interests. 1.30 "Management Rights Agreement" means the Management Rights Agreement by and between Purchaser and the Liquidating Seller Stockholder in the form of Exhibit G. 1.31 "MGP Shares" has the meaning set forth in Recital C. 1.32 "MGP Stockholder" has the meaning set forth in the preamble. 1.33 "Material Adverse Effect" means any material adverse effect on the Company's business, operations, assets, financial condition, liabilities, or results of operations or on the ability of any Seller to perform its obligations hereunder. 1.34 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.35 "Partner" means a General Partner or a Limited Partner. 1.36 "Partnership Agreement" means the Second Amended and Restated Limited Partnership Agreement of the Partnership dated as of July 27, 2000, as amended to date. 1.37 "Partnerships" means Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. 1.38 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. -4- 1.39 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.40 "Purchaser Share" has the meaning set forth in Recital F. 1.41 "Purchaser Stock" has the meaning set forth in Recital F. 1.42 "Registration Rights Agreement" means the Registration Rights Agreement by and among the Sellers, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit B. 1.43 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.44 "SPV" has the meaning set forth in Recital D. 1.45 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.46 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser, Lehman Brothers Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.47 "Vessel" means a motor tanker described in Schedule 2. 1.48 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Seller, substantially in the form of Exhibit C. 1.49 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Articles, Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Articles, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. -5- (e) "It" or "its" or words denoting any gender include all genders. ARTICLE 2 Exchange of Securities 2.1 Generally. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, (a) each LP Seller with full title guarantee shall sell, assign, transfer and deliver absolutely by the execution and delivery of the Deed of Assignment and Adherence to Purchaser, and Purchaser shall purchase and accept from each LP Seller, all of such LP Seller's Interests and all of such LP Seller's rights, title, and interest in the Interests free and clear of all Encumbrances, (b) Georgiopoulos with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from Georgiopoulos all of the AGP Shares and all of Georgiopoulos' rights, title, and interest in the AGP Shares free and clear of all Encumbrances, and (c) MGP Stockholder with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from MGP Stockholder all of the MGP Shares and all of MGP Stockholder's rights, title, and interest in the MGP Shares free and clear of all Encumbrances in each case in exchange for the number of Purchaser Shares specified pursuant to Section 2.2. The obligations of the Sellers in this Section 2.1 are several, not joint. 2.2 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to each Seller in consideration of the sale, assignment, transfer, and delivery of all Interests and General Partner Shares to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference and made a part hereof. Purchaser shall deposit 10% of the Purchaser Shares to which the Sellers are entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Purchaser shall deposit an additional 10% of the total number of Purchaser Shares to which each Seller is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against a Seller under Section 14.2 within six months after the Closing, Purchaser shall instruct the Escrow Agent to release such Indemnity Shares to the Sellers entitled to them in accordance with the Plan of Recapitalization. Purchaser shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the relevant Seller to the extent Purchaser and such Seller or a court of competent jurisdiction finally resolves such claim in favor of such Seller without the possibility of appeal. Purchaser shall deposit an additional number of Purchaser Shares equal to the number of Collar Shares specified in Section 9(C)(vi)(a) of the Plan of Recapitalization in escrow in the Collar Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. 2.3 Substituted Partner. Each LP Seller in its capacity as a Limited Partner of the Partnership hereby (a) confirms and acknowledges its intention that the Purchaser or its assignees be admitted to the Partnership as a substituted Limited Partner of the Partnership, (b) gives its consent to the sale and transfer of the Interests to Purchaser and such admission, and -6- (c) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred hereunder. Each LP Seller acknowledges and agrees that it will cease to be a partner of the Partnership as of the Closing. The Purchaser and its assignees agree that so long as any of them is a partner of the Partnership, such partner shall be bound by all of the terms and provisions of the Partnership Agreement as it shall be amended from time to time to the same extent and in the same manner as if the Purchaser or its assignees had been an original party to the Partnership Agreement in place of each LP Seller. 2.4 Administrative General Partner Consents. The Administrative General Partner, in its capacity as such, hereby (a) gives its consent to the sale and transfer of the Interests to Purchaser and to Purchaser's admission as a substituted limited partner of the Partnership, (b) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred under this Agreement, (c) waives any requirement under the Partnership Agreement that an opinion of counsel be delivered in connection with the sale and transfer of the Interests under this Agreement, and (d) other than execution of the Deed of Assignment and Adherence, agrees that no representations or other instruments of assignment are required by the Administrative General Partner for the sale and transfer of the Interests to Purchaser and Purchaser's admission as a limited partner of the Partnership other than as set forth in this Agreement, including the Exhibits hereto. 2.5 Fees and Expenses. Purchaser shall pay all reasonable legal fees and other expenses incurred by the Partnership in connection with Purchaser's substitution as a limited partner. ARTICLE 3 Closing The Closing shall be held at the Recapitalization Closing Time (as defined in the Plan of Recapitalization) at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022. The following shall take place at the Closing: 3.1 Transfer of Interests and Admission of Purchaser as Limited Partner. The transfer of all Interests to Purchaser and the admission of Purchaser as a Limited Partner shall be reflected in the Register of Partnership Interests on the books and records of the Partnership. 3.2 Delivery of Stock and Share Certificates. Georgiopoulos shall deliver or cause to be delivered to Purchaser share certificates representing all the equity interests of the Administrative General Partner (including all issued and outstanding AGP Shares), and MGP Stockholder shall deliver or cause to be delivered to Purchaser stock certificates representing all the equity interests of the Managing General Partner (including all issued and outstanding MGP Shares) accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer. 3.3 Delivery of Purchaser Shares. Purchaser shall deliver to the Escrow Agent certificates representing all of the Purchaser Shares to be issued hereunder. 3.4 Delivery of Schedule of Purchaser Shares. Purchaser shall deliver to the Partners a schedule reflecting issued and outstanding capital stock of Purchaser as of the Closing including the number of Purchaser Shares to be delivered to the Sellers and the number of -7- Purchaser Shares delivered to the various escrow accounts for the benefit of each Seller as more particularly described in the Plan of Recapitalization. 3.5 Resignation of Directors and Officers of General Partners. The directors and officers of the General Partners shall resign as of the Closing, and Purchaser shall be entitled to designate their replacements. 3.6 Lockup Agreement. The Sellers shall execute and deliver to Purchaser the Lockup Agreement. 3.7 Registration Rights Agreement. The Sellers and Purchaser shall execute and deliver the Registration Rights Agreement. 3.8 Legal Opinion. Marshall Islands counsel for the Purchaser shall deliver to the Sellers an opinion containing substantially the items set forth in Exhibit D in a form reasonably acceptable to counsel to the Liquidating Seller Stockholder (the "Closing Opinion"). 3.9 Deed of Assignment and Adherence. Each LP Seller and Purchaser shall execute and deliver the Deed of Assignment and Adherence. 3.10 Transfer Taxes. The Purchaser shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the Interests (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the Interests. ARTICLE 4 Representations and Warranties of the Partnership The Partnership hereby represents and warrants to Purchaser as follows: 4.1 Organization and Good Standing of Partnership. The Partnership is a partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands. The Partnership has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Partnership is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Copies of the certificate of registration of exempted limited partnership, each annual return and declaration of the Partnership since its formation, and the Partnership Agreement and all amendments thereto have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the Partners of the Partnership and all other records regarding the governance or ownership of the Partnership have been made available to Purchaser and are true, complete and accurate in all material respects. Other than the SPVs listed in Schedule 1, the Partnership has no subsidiaries and does not own any equity interest in any Person whatsoever. 4.2 Organization and Good Standing of SPVs. Each SPV is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in -8- good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not be reasonably likely to have a Material Adverse Effect. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to Purchaser and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. 4.3 Capitalization, Title. (a) The total issued and outstanding equity of the Partnership consists of the Interests plus the interests of the Managing General Partner and the Administrative General Partner as set forth in Section 4.3(a) of the Disclosure Schedule. The aggregate capital contribution amount set forth in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. (b) The authorized capital and number of outstanding shares of capital of each SPV (the "SPV Shares") are as set forth in Section 4.3(b) of the Disclosure Schedule. All SPV Shares are validly issued and outstanding, fully paid, and non-assessable. The Partnership owns, beneficially and of record, and has good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from the Partnership of any SPV shares. (c) Except as set forth in the Partnership Agreement, there are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any equity of the Company or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of the Company or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of the Company. Except as set forth in the Partnership Agreement, there are no outstanding agreements among partners or members, registration rights agreements, or rights of first refusal pertaining to the Company's equity interests. None of the outstanding equity securities of the Company has been issued in violation of any rights of any Person or in violation of any Law. 4.4 Authorization; Enforceability. The execution and delivery of this Agreement by the Partnership has been duly authorized by all necessary partnership action required on the part of the Partnership. This Agreement has been duly executed and delivered by the Managing General Partner on behalf of the Partnership and constitutes the legal, valid, and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. -9- 4.5 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the certificate of registration of exempted limited partnership of the Partnership or the Partnership Agreement, any resolutions of the Partners of the Partnership, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of the Partnership or any SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Partnership or any SPV under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Partnership or any SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Partnership, any SPV, or their respective properties. 4.6 Financial Statements; Undisclosed Liabilities. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Purchaser) have been prepared from the books and records of the Company on a consistent basis (and, in the case of the Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as at their respective dates and the results of operations (and, in the case of the Financial Statements, the cash flows) of the Company for the periods covered thereby. (b) As of the date of the Balance Sheet, other than those set forth in Section 4.6(b) of the Disclosure Schedule, the Company had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise and, in the case of any such liabilities, debts, or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of the Balance Sheet, the Company has conducted its businesses in the ordinary course consistent with past practice and has not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of the Balance Sheet, there has been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities or results of operations of the Company (other than general economic or industry conditions), and, to the actual knowledge of the General Partners and the Sellers, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. 4.7 Receivables and Payables. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising -10- from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.8 Taxes. (a) Except as set forth in Section 4.8(a) of the Disclosure Schedule, the Company has timely filed with the appropriate taxing authorities all material Returns required to be filed by it (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable as determined on the basis of Tax Law as in effect as of the date hereof, except for Taxes (i) which the Company believes in good faith are not due and payable because they are being diligently contested by appropriate proceedings, (ii) for which the Company has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. (b) Except as set forth in Section 4.8(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to the Company for any Pre-Closing Period, and there are no pending or, to the Seller Parties' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of the Company. No extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. (c) The Company has made provision on the Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.8(c) (ii) of the Disclosure Schedule, the Company is not liable for Taxes of any other Person, and is neither currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Returns that the Company is or may be subject to taxation by that jurisdiction; and (iv) the Company has not filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person (except that the Partnership and the SPVs are treated as a single entity for U.S. federal income tax purposes). 4.9 Title to Properties; Absence of Encumbrances. (a) The Company does not own or lease any real property. (b) Except as set forth in Section 4.9(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in Schedule 2, and has either good title to or a valid leasehold, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on the Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary -11- course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by the Company is subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 Contracts. Each oral or written agreement to which the Partnership or any SPV is a party and which is material to the business of the Company as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by the Partnership or such SPV, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, the Partnership and each SPV are in compliance and are not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which either of them is a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the actual knowledge of the General Partners and the Sellers, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the Disclosure Schedule, to the General Partner's knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified the Partnership or any SPV of any unresolved complaint regarding the performance of the Partnership or any SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, neither the Partnership nor any SPV has received any notice of any termination or non-renewal of any Contract and, to the actual knowledge of the General Partners and the Sellers, no other party to any Contract intends to terminate or not renew any such Contract. 4.11 Insurance. Each insurance policy currently maintained by the Partnership or an SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 Litigation. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the actual knowledge of the General Partners and the Sellers, threatened against the Partnership or any SPV or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV is identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. -12- 4.13 Environmental Matters. Except as would not be reasonably likely to have a Material Adverse Effect: (a) except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the Company are in compliance with applicable Environmental Laws which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof and the Company has not received any written notice of any violation of any Environmental Law; (b) except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Seller Parties' knowledge, threatened against the Partnership, any SPV, or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed; and (c) except as set forth on Section 4.13(c) of the Disclosure Schedule, to the actual knowledge of the General Partners and Sellers, there are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Partnership, any SPV, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed. 4.14 Compliance with Law. (a) Except as would not be reasonably likely to have a Material Adverse Effect, the Company is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. The Company has not received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) the Company has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to the actual knowledge of the General Partners and the Sellers, threatened seeking the revocation or limitation of any such License. 4.15 Employees. The Company does not now have, nor has it since the date of its formation had, any employees. 4.16 Books and Records. The books and records of the Company with respect to the Company, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. -13- ARTICLE 5 Representations and Warranties of each Seller Each Seller, severally and not jointly hereby represents and warrants to Purchaser as follows (provided that (a) the Liquidating Seller Stockholder shall be deemed a Seller for purposes of this Article 5 and (b) OCM Ajax Investments, Inc. and the Liquidating Seller Stockholder are representing and warranting to Purchaser jointly and severally as between them only): 5.1 Authorization; Enforceability. If such Seller is an individual, he or she has full legal capacity to enter into and carry out his or her obligations under this Agreement. If such Seller is not an individual, such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and the execution and delivery of this Agreement by such Seller have been duly authorized by all necessary corporate or analogous action. This Agreement has been duly executed and delivered by such Seller and constitutes the legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 5.2 No Conflicts. Neither the execution and delivery by such Seller of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate such Seller's certificate of incorporation, by-laws, or analogous constitutive or governing documents, or any resolutions of the board of directors of such Seller or person(s) exercising analogous powers, or (b) except as would not be reasonably likely to have a material adverse effect on such Seller's ability to consummate the transactions contemplated hereby, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of such Seller under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which such Seller is a party or by which any of its properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over such Seller or its properties. 5.3 Investment Purpose; Private Placement. (a) Such Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. In addition, except (i) as otherwise previously disclosed to the Purchaser in writing before the date of this Agreement, (ii) with respect to the potential sale by the Sellers in the overallotment option in connection with Purchaser's initial public offering or (iii) as set forth in Recital G, the Sellers are not under a binding commitment or obligation to sell, transfer, or otherwise dispose of the Purchaser Shares to be acquired by such Sellers pursuant to this Agreement. Notwithstanding the foregoing, each Seller has, subject to the Lockup Agreement, the right at all times to sell or otherwise dispose of all or any part of the Purchaser Shares pursuant to a registration statement under the Securities Act or pursuant to an -14- exemption from the registration requirements of the Securities Act, and the right to dispose of its Purchaser Shares is within his, her or its control. (b) Such Seller acknowledges that the issuance of the Purchaser Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Such Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (c) Such Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. (d) Such Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (e) Such Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Such Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by such Seller have been made available to such Seller and the persons that such Seller has retained to advise it with respect to such an acquisition, and that such Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) Such Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax considerations of an investment in the Purchaser Shares. Such Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Purchaser Shares. Such Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Article 8 or on any representations of any officer, director, employee, founder or agent of Purchaser. ARTICLE 6 Representations and Warranties of each LP Seller Each LP Seller, severally and not jointly, hereby represents and warrants to Purchaser as follows: 6.1 Title. The aggregate capital contribution amount set forth opposite such LP Seller's name in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. Such LP Seller has good, valid, and marketable title to and, subject to the terms of the Partnership Agreement, the right to transfer to Purchaser, all of the Interests corresponding to such capital contributions, free -15- and clear of any and all Encumbrances. At the Closing, such LP Seller will convey ownership of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. Subject to the terms of the Partnership Agreement, no Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from such LP Seller of any Interests. ARTICLE 7 Representations and Warranties of Georgiopoulos Georgiopoulos hereby represents and warrants to Purchaser as follows: 7.1 Capitalization; Title. The authorized capital of the Administrative General Partner consists of 50,000 shares, par value $1.00 per share, of which 1,000 shares are outstanding. All AGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Administrative General Partner has good, valid, and marketable title to all of the Interests the Administrative General Partner owns, free and clear of any and all Encumbrances. Georgiopoulos owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the AGP Shares, free and clear of any and all Encumbrances. At the Closing, Georgiopoulos will convey ownership of the AGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Georgiopoulos of any AGP Shares. 7.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the memorandum of association or articles of association of the Administrative General Partner or any resolutions of the directors or members of the Administrative General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Administrative General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Administrative General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Administrative General Partner or its properties. 7.3 Financial Condition. The Administrative General Partner has conducted no business other than serving as administrative general partner of Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as administrative general partner for the benefit of the Partnership in the Administrative General Partner's good faith judgment. -16- ARTICLE 8 Representations and Warranties of MGP Stockholder MGP Stockholder hereby represents and warrants to Purchaser as follows: 8.1 Capitalization; Title. (a) The authorized capital of the Managing General Partner consists of 500 shares of stock, without par value, of which 100 shares are outstanding. All MGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Managing General Partner has good, valid, and marketable title to all of the Interests the Managing General Partner owns, free and clear of any and all Encumbrances. MGP Stockholder owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the MGP Shares, free and clear of any and all Encumbrances. At the Closing, MGP Stockholder will convey ownership of the MGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from MGP Stockholder of any MGP Shares. 8.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the articles of incorporation or by-laws of the Managing General Partner or any resolutions of the directors or members of the Managing General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Managing General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Managing General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over Managing General Partner or its properties. 8.3 Financial Condition. The Managing General Partner has conducted no business other than serving as managing general partner of the Partnership and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as managing general partner for the benefit of the Partnership in the Managing General Partner's good faith judgment. ARTICLE 9 Representations and Warranties of Purchaser Purchaser represents and warrants to the Sellers as follows: 9.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. -17- 9.2 Capitalization. The authorized capital of the Purchaser consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following the Closing the outstanding capital stock of the Purchaser shall be as set forth in the schedule delivered pursuant to Section 3.4. 9.3 Authorization. The execution and delivery of this Agreement by Purchaser have been duly authorized by all necessary corporate action required on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 9.4 No Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict with or violate the Certificate of Incorporation or By-Laws of Purchaser, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Purchaser (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Purchaser to consummate the transactions contemplated hereby). 9.5 Litigation. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Purchaser, threatened against Purchaser or any of its properties or assets, or any director, officer or employee of Purchaser in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 9.6 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 9.7 Private Placement Purchaser is acquiring the Interests and the GP Shares solely for the purpose of ownership (directly or indirectly) of the Partnership as a whole for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Purchaser acknowledges that the Interests and the GP Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Purchaser acknowledges that the Interests and the GP Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. -18- 9.8 Contribution Agreements. Each Contribution Agreement that Purchaser is entering into pursuant to the Plan of Recapitalization with partners of the Exchanging Partnerships (as defined in the Plan of Recapitalization) is substantially similar to this Agreement and contains substantially the same economic and legal terms. 9.9 No Reacquisition. Except as provided for hereunder or under the Plan of Recapitalization, the Purchaser has no plan or intention to reacquire any of the Purchaser Shares issued hereunder to OCM Ajax Investments, Inc. from OCM Ajax Investments, Inc. or the Liquidating Seller Stockholder. 9.10 No Transfers. Purchaser has no plan or intention to sell, transfer, or otherwise dispose of any of the Interests acquired hereunder, other than as permitted under Section 368(a)(2)(C) of the Code and Treasury Regulation ss.1.368-1. 9.11 Investment Company. Purchaser is not an "investment company" as defined in Section 368(a)(2)(F) of the Code. 9.12 No Assumption of Liabilities. Purchaser will not acquire any of the liabilities of OCM Ajax Investments, Inc. 9.13 Liquidating Seller Stockholder. For purposes of this Article 9, the Liquidating Seller Stockholder shall be deemed to be a Seller. ARTICLE 10 Covenants The Parties hereby covenant and agree as follows: 10.1 Conduct of Business. From the date hereof until the Closing, each of the Company and the General Partners will conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Purchaser: (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.3(b) with respect to, any Interests or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any Seller or general partner of the Partnership; -19- (e) redeem, purchase or otherwise acquire, directly or indirectly, any Interest; or (f) enter into any commitment to do any of the foregoing. 10.2 No Solicitation of Alternative Transaction. For a period of one hundred and eighty (180) days following the date hereof, the Sellers shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Partnership, any general partner of the Partnership, any SPV, or their assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Partnership or any SPV (collectively, "Acquisition Proposals"). The Sellers shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. Notwithstanding the foregoing, any Seller who is in material breach of any representation warranty, covenant, or agreement hereunder shall be bound by this Section 10.2 regardless of the expiration of such one hundred eighty (180) day period. 10.3 Taxes and Cooperation on Tax Matters. (a) Tax Returns; Liability for Taxes. (1) At the Managing General Partner's election, the Managing General Partner shall be responsible for and shall have the ultimate discretion with respect to, all Returns required or permitted by applicable law to be filed by the Managing General Partner with respect to the Company for all taxable periods that end on or before the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Purchaser (which approval shall not be unreasonably withheld). If the Managing General Partner does not elect to prepare and file such Returns, the Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, such Returns; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall no be unreasonably withheld). (2) The Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, all Returns required to be filed by the Company for all taxable periods that begin before and end after the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall not be unreasonably withheld). (3) The Purchaser shall be responsible for, and shall have ultimate discretion with respect to, all Returns required to be filed by the Company for taxable periods that begin on or after the Closing Date. -20- (4) All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of Returns of the Company (whether filed and prepared by the Managing General Partner or the Purchaser) shall be the responsibility of the Company. (5) Purchaser shall be liable and shall indemnify the Sellers for any and all Taxes imposed on the Company (but not the Sellers) for which the Sellers are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 10.3(a)(5) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any tax benefit (e.g., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). (6) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Purchaser, the Company, or the Sellers under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the Interests. (7) The Sellers shall notify Purchaser in writing of, and keep Purchaser fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Purchaser has indemnified the Sellers pursuant to this Section 9.03(a). Purchaser may control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Sellers informed on a current basis of the status of any such proceedings and (b) the Sellers and their counsel have the right to participate, at the Sellers' expense, in any such proceeding. The Sellers shall not settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Purchaser, which consent may not be unreasonably withheld. (b) New Elections. No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Company which may have an effect on the Company for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Purchaser. (c) Cooperation. (1) Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 10.3 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Sellers (before the Closing) and Purchaser (after the Closing) shall each cause the Company (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other -21- party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Sellers, as the case may be, shall allow the other party to take possession of such books and records. (2) Purchaser and the Sellers further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Purchaser or the Sellers. 10.4 Execution of Documents. Each Seller shall execute and deliver to Purchaser the Registration Rights Agreement and the Lockup Agreement. The Purchaser shall execute and deliver to each Seller the Registration Rights Agreement. 10.5 HSR Act. The Sellers and Purchaser shall make all filings, cooperate fully with respect to all filings required by Sellers and Purchaser, and shall take any other actions required under the HSR Act with respect to the transactions contemplated hereunder. 10.6 Further Assurances. The Partnership and the Sellers agree to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Purchaser agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as the Partnership and the Sellers may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof 10.7 Restrictions on Securities Each Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend and that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." 10.8 Continuance of Business of the Partnerships. The Purchaser shall continue the historic business of the Partnerships or use a significant portion of the Partnerships' historic business assets in a business. -22- 10.9 Overallotment Sales. If the LP Sellers have the opportunity to sell Purchaser Shares in the underwriters' overallotment option in the Purchaser's initial public offering, then at the closing of the issuance of any Purchaser Shares pursuant to such overallotment option, Purchaser shall make substantially similar representations and warranties to such selling LP Sellers as Purchaser makes to the underwriters and obtain for such selling LP Sellers an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling LP Sellers' use in their diligence review for sale under such overallotment option; provided, however, that such selling LP Sellers shall provide any information or materials reasonably requested by such accountants and counsel. 10.10 Failure to Close Initial Public Offering. After the Closing Date, in the event that the sale of Purchaser's Common Stock pursuant to the Underwriting Agreement does not close, (a) Peter Georgiopoulos will be the Chief Executive Officer of Purchaser pursuant to a previously negotiated employment agreement, (b) Purchaser will promptly call a meeting of stockholders for the purpose of electing a board of directors, and (c) the Sellers will negotiate in good faith to create appropriate corporate governance and stockholder arrangements that (x) will include tag-along rights and drag-along rights, (y) may include rights of first refusal, preemptive rights, and registration rights, and (z) will include limitations on affiliate transactions, in each case, the terms of which will be negotiated among the parties. 10.11 Liquidating Seller Stockholder. For purposes of this Article 10, the Liquidating Seller Stockholder shall be deemed to be a Seller. ARTICLE 11 Conditions Precedent to Obligations of Purchaser The obligations of Purchaser under Article 2 and Article 3 and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 11.1 Representations and Warranties. Each and every representation and warranty of the Sellers and the Partnership contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 11.2 Compliance with Covenants. The Sellers and the Company shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. -23- 11.3 Lack of Adverse Change. Since the date of the Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 11.4 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 11.5 Consents of Third Parties. All material consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 11.6 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 11.7 Lockup Agreement. The Sellers shall have executed and delivered to Purchaser the Lockup Agreement. 11.8 Registration Rights Agreement. The Sellers shall have executed and delivered to Purchaser the Registration Rights Agreement. 11.9 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 11.10 Waiver and Contribution Agreement. Each Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. 11.11 Deed of Assignment and Adherence. Each LP Seller shall have executed and delivered to Purchaser the Deed of Assignment and Adherence. 11.12 Escrow Agreement. Each Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement. -24- 11.13 Customary Closing Documents. Purchaser shall have received such other customary closing documents as Purchaser or its counsel may reasonably request (other than legal opinions). ARTICLE 12 Conditions Precedent to Obligations of the Sellers The obligations of the Sellers under Article 2 and Article 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Sellers: 12.1 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 12.2 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 12.3 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 12.4 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 12.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of the Sellers, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to the Sellers. 12.6 Registration Rights Agreement. Purchaser shall have executed and delivered to the Sellers the Registration Rights Agreement. -25- 12.7 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 12.8 Deed of Assignment and Adherence. Purchaser shall have executed and delivered to each LP Seller the Deed of Assignment and Adherence. 12.9 Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement. 12.10 Closing Opinion. The Sellers shall have received the Closing Opinion. 12.11 Management Rights Agreement. Purchaser and the Liquidating Seller Stockholder shall have entered into the Management Rights Agreement. 12.12 Customary Closing Documents. Sellers shall have received such other customary closing documents as Sellers or their counsel may reasonably request (other than legal opinions in addition to the Closing Opinion). ARTICLE 13 Termination of Agreement 13.1 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and a Majority in Interest; (b) by Purchaser or a Majority in Interest, if the Closing shall not have been consummated by 180 days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party or Parties seeking to terminate this Agreement; or (c) by Purchaser on the one hand, or a Majority in Interest or Georgiopoulos on the other hand, if any Seller or Purchaser, respectively, fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 13.1(c) if it is also in material breach of any provision of this Agreement. 13.2 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and the Sellers shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Article 14 and Article 15 shall survive any termination of this Agreement. -26- ARTICLE 14 Remedies 14.1 Survival. The representations and warranties of each Seller in Sections 5.1, 6.1, 7.1, and Section 8.1 and Purchaser in Sections 9.1 through 9.3 shall survive the Closing for a period of eighteen months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period alleging breach thereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The representations and warranties of Purchaser in Sections 9.9, 9.10, 9.11, and 9.12 shall not survive the Closing. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial six-month period alleging breach hereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely, except that the covenant set forth in Section 10.8 shall survive for only one year. 14.2 Indemnification by Sellers. (a) Each Seller shall, severally and not jointly, indemnify and hold harmless Purchaser, the Company, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with (i) a breach by such Seller of any representation, warranty, or covenant made by such Seller in this Agreement or (ii) a breach by the Partnership of any representation, warranty, or covenant made by the Partnership in this Agreement in favor of Purchaser, in each case solely to the extent provided in Section 14.2(b) but subject to the exceptions in Section 14.2(d). (b) Except for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(i) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares allocable to such Seller equal to the amount of the applicable Loss divided by the IPO Price until the number of Indemnity Shares allocable to such Seller equals zero. Each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(ii) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price (in accordance with Section 9(D) of the Plan of Recapitalization) until the total number of Indemnity Shares equals zero. If any Indemnity Shares remain after the return thereof pursuant to the preceding sentences, such Indemnity Shares shall be re-allocated among the Sellers in accordance with the Plan of Recapitalization. Any fractional shares among such Indemnity Shares subject to release from escrow under this Section 14.2(b) shall be subject to Section 7 of the Plan of Recapitalization. (c) With respect to indemnification for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, Purchaser shall first instruct the Escrow Agent to return to it Indemnity Shares allocable to such Seller in accordance with the -27- first sentence of this Section 14.2(b). To the extent such return in Indemnity Shares does not fully offset the Loss, such Seller shall satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the remainder of the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to such Seller. To the extent such Seller and its affiliate transferees no longer owns Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, such Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any Seller be required to return to Purchaser more than such Seller's Purchaser Shares (or the cash equivalent of such Purchaser Shares based on the IPO Price if such Seller no longer owns such Purchaser Shares). (d) The remedies provided in this Section 14.2 are the exclusive remedy of the Purchaser with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 14.2 shall prohibit Purchaser from seeking specific performance or injunctive relief against any Seller or the Partnership in respect of a breach by such Seller or the Partnership of any covenant hereunder; and further provided, that nothing in this Section 14.2 shall limit Purchaser's remedies for a breach of covenant occurring prior to the Closing. 14.3 Indemnification by Purchaser. (a) Purchaser shall indemnify and hold harmless each Seller and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Purchaser of any representation, warranty, or covenant made by Purchaser in this Agreement, in each case solely to the extent provided in Section 14.3(b). (b) Purchaser's sole obligation and each Seller's sole remedy for a breach by Purchaser of a representation, warranty, or covenant hereunder shall be for Purchaser to pay such Seller the amount of such Seller's Loss in cash; provided that Purchaser's total obligations under this Section 14.3 shall in no event exceed the aggregate value of the Interests and the General Partner Shares; provided, however, that nothing in this Section 14.3(b) shall prohibit such Seller from seeking specific performance or injunctive relief against Purchaser in respect of a breach by Purchaser of any covenant hereunder; and further provided, that nothing in this Section 14.3(b) shall limit such Seller's remedies for a breach of covenant occurring prior to the Closing. 14.4 Liquidating Seller Stockholder. For purposes of this Article 14, the Liquidating Seller Stockholder shall be deemed to be a Seller. ARTICLE 15 Miscellaneous 15.1 Limited Partners. The Parties acknowledge and agree that the LP Sellers are acting in all matters with respect to the Partnership hereunder as limited partners. 15.2 Expenses. Except as set forth in Section 15.3, each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including -28- fees of brokers, finders, advisers, attorneys, and accountants; provided that Purchaser shall pay the fees of U.S., Cayman Islands and Marshall Islands counsel to OCM Ajax Investments, Inc. 15.3 HSR Expenses. The Partnerships shall bear all expenses pro rata relating to filings in compliance with the HSR Act to be made in respect of the transactions contemplated hereunder; provided that Purchaser shall bear all such expenses if Purchaser completes the IPO (as defined in the Plan of Recapitalization). 15.4 Entirety of Agreement. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all representations, warranties, covenants, and agreements which have induced this Agreement. 15.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) If to Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to an LP Seller, to such LP Seller and its legal representative using the contact information set forth below such LP Seller's signature on the signature pages hereto. (c) If to Georgiopoulos or MGP Stockholder: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 15.6 No Exclusion of Vessels. If this Agreement relates to a Partnership that owns more than one Vessel, Purchaser shall have no right hereunder to close as to one or more such -29- Vessels and exclude one or more other Vessels from the Partnership in connection with the transactions contemplated hereunder without amendment to the Agreement pursuant to Section 15.7. In addition, this Agreement may not be terminated except in accordance with Section 13.1. 15.7 Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by Purchaser, the Partnership, a Majority in Interest, and Georgiopoulos. 15.8 Waiver. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. 15.9 Assignment; Binding Nature; No Beneficiaries. This Agreement may not be assigned by any Party without the prior written consent of Purchaser, a Majority in Interest, and Georgiopoulos; provided, however, that Purchaser may assign its rights hereunder to any direct or indirect wholly-owned subsidiary of Purchaser which assumes the obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations, and further provided, that consideration provided for by Article 2 shall in any event be issued in shares of the original Purchaser hereunder which shall be the entity that sells shares to the underwriters pursuant to the Underwriting Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 15.10 Severability. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 15.11 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15.12 Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. -30- 15.13 Negotiated Agreement. Purchaser and the Sellers acknowledge that they have been advised to seek advice of their own counsel, the language chosen by the Parties hereto expresses their mutual intent, and they accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. 15.14 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 15.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 15.16 Execution and Delivery. This Agreement may be executed in two or more 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. 15.17 Consent and Waiver to Certain Assignments of Partnership Interests. If the Partnership is named on Schedule 3, each LP Seller and each General Partner hereby (i) consents to the assignments of partnership interests contemplated by the assignments of partnership interests under any of the agreements listed in Schedule 3 (the "Assignments") and (ii) waives all its rights and interests under Section 9.01 of the limited partnership agreements of the Partnerships with respect to such assignments of partnership interests. [The remainder of this page has intentionally been left blank.] -31- IN WITNESS WHEREOF, all of the Parties hereto have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer AJAX II, L.P. By GENMAR Ajax II Corporation, its Managing General Partner By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: [SIGNATURES OF LIMITED PARTNERS] PETER C. GEORGIOPOULOS in his individual capacity Witness: /s/ Peter C. Georgiopoulos /s/ Lambrini Hilias - --------------------------------- ------------------------------- Printed Name: Lambrini Hilias -32- AJAX II LLC By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GENMAR AJAX II CORPORATION in its capacity as Managing General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GMC ADMINISTRATION LTD. in its capacity as Administrative General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: -33- LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A -- Lockup Agreement Exhibit B -- Registration Rights Agreement Exhibit C -- Waiver and Contribution Agreement Exhibit D -- Closing Opinion DISCLOSURE SCHEDULE: Schedule 4.3(a) -- Capitalization; Title Schedule 4.3(b) -- Capitalization; Title (cont'd) Schedule 4.6(b) -- Financial Statements; Undisclosed Liabilities Schedule 4.8(a) -- Taxes Schedule 4.8(b) -- Taxes (cont'd) Schedule 4.8(c) -- Taxes (cont'd) Schedule 4.9(b) -- Title to Properties; Absence of Encumbrances Schedule 4.10 -- Contracts Schedule 4.12 -- Litigation Schedule 4.13(a) -- Environmental Matters Schedule 4.13(b) -- Environmental Matters (cont'd) Schedule 4.13(c) -- Environmental Matters (cont'd) SCHEDULES: Schedule 1 -- SPVs Schedule 2 -- Vessels Schedule 3 -- Certain Assignments of Partnership Interests - --------------- * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.4 6 a2050304zex-2_4.txt EXHIBIT 2.4 Exhibit 2.4 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD. BOSS, L.P. THE LIMITED PARTNERS OF BOSS, L.P. GENMAR BOSS LTD. as the sole stockholder of GENMAR BOSS CORPORATION PETER C. GEORGIOPOULOS as the sole stockholder of GMC ADMINISTRATION LTD. GENMAR BOSS CORPORATION as Managing General Partner of BOSS, L.P. and GMC ADMINISTRATION LTD. as Administrative General Partner of BOSS, L.P. Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), Boss, L.P., a Cayman Islands limited partnership (the "Partnership") by its Managing General Partner, the parties listed under the heading "LP Sellers" on the signature pages hereto (the "LP Sellers"), Peter C. Georgiopoulos, an individual with a business address of 35 West 56th Street New York, NY 10019 ("Georgiopoulos"), Genmar Boss Ltd., a New York corporation ("MGP Stockholder") and together with Georgiopoulos and the LP Sellers, the "Sellers"), Genmar Boss Corporation, a Marshall Islands corporation, in its capacity as Managing General Partner of the Partnership (the "Managing General Partner"), and GMC Administration Ltd., a Cayman Islands exempted company, in its capacity as Administrative General Partner of the Partnership (the "Administrative General Partner" and, together with the Managing General Partner, the "General Partners"). Purchaser, the Sellers, and the General Partners are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The LP Sellers are all of the limited partners of the Partnership and owners of all of the Interests (as hereinafter defined). B. Georgiopoulos owns, directly, all shares of the issued share capital (the "AGP Shares") of the Administrative General Partner and all shares of the outstanding capital stock of MGP Stockholder. C. MGP Stockholder owns, directly, all shares of the outstanding capital stock (the "MGP Shares", and together with the AGP Shares, the "General Partner Shares") of the Managing General Partner. D. The Partnership owns all of the issued and outstanding share capital of each entity listed in Schedule 1, (each an "SPV" and, together with the Partnership, the "Company") each of which owns a Vessel (as hereinafter defined). E. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, as further described in the Plan of Recapitalization. F. As part of the Recapitalization, Purchaser desires to exchange shares ("Purchaser Shares") of the common stock of Purchaser, par value $.01 per share (the "Purchaser Stock") for all of the Interests and General Partner Shares on the terms and conditions set forth herein and therein (the "Exchange"). G. The Parties intend that the Exchange will be treated either as an "exchange" pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code") or as part of a "reorganization" within the meaning of Section 368(a) of the Code. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 Definitions 1.1 "AGP Shares" shall have the meaning set forth in Recital B. 1.2 "Balance Sheet" means the adjusted unaudited consolidated balance sheet of the Company as of March 31, 2001 previously delivered to Purchaser. 1.3 "Closing" means the closing of the transactions contemplated hereby. 1.4 "Closing Date" means the date on which the Closing occurs. 1.5 "Closing Opinion" has the meaning set forth in Section 3.9. 1.6 "Company" has the meaning set forth in Recital D. 1.7 "Contracts" has the meaning set forth in Section 4.10. 1.8 "Deed of Assignment and Adherence" means the Deed of Assignment and Adherence to be executed by each LP Seller, the Purchaser, the Administrative General Partner, and the Managing General Partner in substantially the form of Exhibit F. 1.9 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Sellers have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or the violation or alleged violation of any Environmental Law. 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. -2- 1.13 "Escrow Agent" has the meaning assigned to such term in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Purchaser, the Sellers, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may reasonably be required by the Escrow Agent. 1.15 "Financial Statements" means the audited consolidated balance sheet and statements of earnings, partners' equity and cash flows of the Company as of, and for each of the fiscal years ended December 31, 2000, 1999, and 1998. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "General Partnership Shares" has the meaning set forth in Recital C. 1.18 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.20 "Indemnity Shares" means the Purchaser Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.21 "Interests" mean the limited partnership interests in the Partnership held by Limited Partners. 1.22 "Interim Financial Statements" means the unaudited consolidated financial statements of the Company as of, and for the period ended March 31, 2001 previously delivered to Purchaser. 1.23 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.24 "Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.25 "Licenses" has the meaning set forth in Section 4.14(b). 1.26 "Limited Partner" means a limited partner of the Partnership. 1.27 "Lockup Agreement" means the Lockup Agreement executed by the Sellers regarding the Purchaser Shares in the form of Exhibit A. -3- 1.28 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.29 "Majority in Interest" means LP Sellers holding a majority of the Interests. 1.30 "MGP Shares" has the meaning set forth in Recital C. 1.31 "MGP Stockholder" has the meaning set forth in the preamble. 1.32 "Material Adverse Effect" means any material adverse effect on the Company's business, operations, assets, financial condition, liabilities, or results of operations or on the ability of any Seller to perform its obligations hereunder. 1.33 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.34 "Partner" means a General Partner or a Limited Partner. 1.35 "Partnership Agreement" means the Limited Partnership Agreement of the Partnership dated as of February 18, 1998, as amended to date. 1.36 "Partnerships" means Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. 1.37 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. 1.38 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.39 "Purchaser Share" has the meaning set forth in Recital F. 1.40 "Purchaser Stock" has the meaning set forth in Recital F. 1.41 "Registration Rights Agreement" means the Registration Rights Agreement by and among the Sellers, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit B. -4- 1.42 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.43 "SPV" has the meaning set forth in Recital D. 1.44 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.45 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser, Lehman Brothers Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.46 "Vessel" means a motor tanker described in Schedule 2. 1.47 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Seller, substantially in the form of Exhibit C. 1.48 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Articles, Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Articles, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. ARTICLE 2 Exchange of Securities 2.1 Generally. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, (a) each LP Seller with full title guarantee shall sell, assign, transfer and deliver absolutely by the execution and delivery of the Deed of Assignment and Adherence to Purchaser, and Purchaser shall purchase and accept from each LP Seller, all of such LP Seller's Interests and all of such LP Seller's rights, title, and interest in the Interests free and -5- clear of all Encumbrances, (b) Georgiopoulos with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from Georgiopoulos all of the AGP Shares and all of Georgiopoulos' rights, title, and interest in the AGP Shares free and clear of all Encumbrances, and (c) MGP Stockholder with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from MGP Stockholder all of the MGP Shares and all of MGP Stockholder's rights, title, and interest in the MGP Shares free and clear of all Encumbrances in each case in exchange for the number of Purchaser Shares specified pursuant to Section 2.2. The obligations of the Sellers in this Section 2.1 are several, not joint. 2.2 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to each Seller in consideration of the sale, assignment, transfer, and delivery of all Interests and General Partner Shares to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference and made a part hereof. Purchaser shall deposit 10% of the Purchaser Shares to which the Sellers are entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Purchaser shall deposit an additional 10% of the total number of Purchaser Shares to which each Seller is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against a Seller under Section 14.2 within six months after the Closing, Purchaser shall instruct the Escrow Agent to release such Indemnity Shares to the Sellers entitled to them in accordance with the Plan of Recapitalization. Purchaser shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the relevant Seller to the extent Purchaser and such Seller or a court of competent jurisdiction finally resolves such claim in favor of such Seller without the possibility of appeal. Purchaser shall deposit an additional number of Purchaser Shares equal to the number of Collar Shares specified in Section 9(C)(vi)(a) of the Plan of Recapitalization in escrow in the Collar Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. 2.3 Substituted Partner. Each LP Seller in its capacity as a Limited Partner of the Partnership hereby (a) confirms and acknowledges its intention that the Purchaser or its assignees be admitted to the Partnership as a substituted Limited Partner of the Partnership, (b) gives its consent to the sale and transfer of the Interests to Purchaser and such admission, and (c) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred hereunder. Each LP Seller acknowledges and agrees that it will cease to be a partner of the Partnership as of the Closing. The Purchaser and its assignees agree that so long as any of them is a partner of the Partnership, such partner shall be bound by all of the terms and provisions of the Partnership Agreement as it shall be amended from time to time to the same extent and in the same manner as if the Purchaser or its assignees had been an original party to the Partnership Agreement in place of each LP Seller. 2.4 Administrative General Partner Consents. The Administrative General Partner, in its capacity as such, hereby (a) gives its consent to the sale and transfer of the Interests to Purchaser and to Purchaser's admission as a substituted limited partner of the Partnership, (b) -6- waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred under this Agreement, (c) waives any requirement under the Partnership Agreement that an opinion of counsel be delivered in connection with the sale and transfer of the Interests under this Agreement, and (d) other than execution of the Deed of Assignment and Adherence, agrees that no representations or other instruments of assignment are required by the Administrative General Partner for the sale and transfer of the Interests to Purchaser and Purchaser's admission as a limited partner of the Partnership other than as set forth in this Agreement, including the Exhibits hereto. 2.5 Fees and Expenses. Purchaser shall pay all reasonable legal fees and other expenses incurred by the Partnership in connection with Purchaser's substitution as a limited partner. ARTICLE 3 Closing The Closing shall be held at the Recapitalization Closing Time (as defined in the Plan of Recapitalization) at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022. The following shall take place at the Closing: 3.1 Transfer of Interests and Admission of Purchaser as Limited Partner. The transfer of all Interests to Purchaser and the admission of Purchaser as a Limited Partner shall be reflected in the Register of Partnership Interests on the books and records of the Partnership. 3.2 Delivery of Stock and Share Certificates. Georgiopoulos shall deliver or cause to be delivered to Purchaser share certificates representing all the equity interests of the Administrative General Partner (including all issued and outstanding AGP Shares), and MGP Stockholder shall deliver or cause to be delivered to Purchaser stock certificates representing all the equity interests of the Managing General Partner (including all issued and outstanding MGP Shares) accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer. 3.3 Delivery of Purchaser Shares. Purchaser shall deliver to the Escrow Agent certificates representing all of the Purchaser Shares to be issued hereunder. 3.4 Delivery of Schedule of Purchaser Shares. Purchaser shall deliver to the Partners a schedule reflecting issued and outstanding capital stock of Purchaser as of the Closing including the number of Purchaser Shares to be delivered to the Sellers and the number of Purchaser Shares delivered to the various escrow accounts for the benefit of each Seller as more particularly described in the Plan of Recapitalization. 3.5 Resignation of Directors and Officers of General Partners. The directors and officers of the General Partners shall resign as of the Closing, and Purchaser shall be entitled to designate their replacements. 3.6 Lockup Agreement. The Sellers shall execute and deliver to Purchaser the Lockup Agreement. -7- 3.7 Registration Rights Agreement. The Sellers and Purchaser shall execute and deliver the Registration Rights Agreement. 3.8 Legal Opinion. Marshall Islands counsel for the Purchaser shall deliver to the Sellers an opinion containing substantially the items set forth in Exhibit D in a form reasonably acceptable to counsel to the Liquidating Seller Stockholder (the "Closing Opinion"). 3.9 Deed of Assignment and Adherence. Each LP Seller and Purchaser shall execute and deliver the Deed of Assignment and Adherence. 3.10 Transfer Taxes. The Purchaser shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the Interests (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the Interests. ARTICLE 4 Representations and Warranties of the Partnership The Partnership hereby represents and warrants to Purchaser as follows: 4.1 Organization and Good Standing of Partnership. The Partnership is a partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands. The Partnership has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Partnership is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Copies of the certificate of registration of exempted limited partnership, each annual return and declaration of the Partnership since its formation, and the Partnership Agreement and all amendments thereto have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the Partners of the Partnership and all other records regarding the governance or ownership of the Partnership have been made available to Purchaser and are true, complete and accurate in all material respects. Other than the SPVs listed in Schedule 1, the Partnership has no subsidiaries and does not own any equity interest in any Person whatsoever. 4.2 Organization and Good Standing of SPVs. Each SPV is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not be reasonably likely to have a Material Adverse Effect. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to Purchaser and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. -8- 4.3 Capitalization, Title. (a) The total issued and outstanding equity of the Partnership consists of the Interests plus the interests of the Managing General Partner and the Administrative General Partner as set forth in Section 4.3(a) of the Disclosure Schedule. The aggregate capital contribution amount set forth in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. (b) The authorized capital and number of outstanding shares of capital of each SPV (the "SPV Shares") are as set forth in Section 4.3(b) of the Disclosure Schedule. All SPV Shares are validly issued and outstanding, fully paid, and non-assessable. The Partnership owns, beneficially and of record, and has good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from the Partnership of any SPV shares. (c) Except as set forth in the Partnership Agreement, there are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any equity of the Company or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of the Company or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of the Company. Except as set forth in the Partnership Agreement, there are no outstanding agreements among partners or members, registration rights agreements, or rights of first refusal pertaining to the Company's equity interests. None of the outstanding equity securities of the Company has been issued in violation of any rights of any Person or in violation of any Law. 4.4 Authorization; Enforceability. The execution and delivery of this Agreement by the Partnership has been duly authorized by all necessary partnership action required on the part of the Partnership. This Agreement has been duly executed and delivered by the Managing General Partner on behalf of the Partnership and constitutes the legal, valid, and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 4.5 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the certificate of registration of exempted limited partnership of the Partnership or the Partnership Agreement, any resolutions of the Partners of the Partnership, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of the Partnership or any SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Partnership or any SPV under (x) any -9- note, mortgage, deed of trust, lease or other agreement or instrument to which the Partnership or any SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Partnership, any SPV, or their respective properties. 4.6 Financial Statements; Undisclosed Liabilities. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Purchaser) have been prepared from the books and records of the Company on a consistent basis (and, in the case of the Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as at their respective dates and the results of operations (and, in the case of the Financial Statements, the cash flows) of the Company for the periods covered thereby. (b) As of the date of the Balance Sheet, other than those set forth in Section 4.6(b) of the Disclosure Schedule, the Company had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise and, in the case of any such liabilities, debts, or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of the Balance Sheet, the Company has conducted its businesses in the ordinary course consistent with past practice and has not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of the Balance Sheet, there has been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities or results of operations of the Company (other than general economic or industry conditions), and, to the actual knowledge of the General Partners and the Sellers, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. 4.7 Receivables and Payables. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.8 Taxes. (a) Except as set forth in Section 4.8(a) of the Disclosure Schedule, the Company has timely filed with the appropriate taxing authorities all material Returns required to be filed by it (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable as determined on the basis of Tax Law as in effect as of the date hereof, except for Taxes (i) which the Company believes in good faith are not due and payable because they are being diligently contested by appropriate -10- proceedings, (ii) for which the Company has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. (b) Except as set forth in Section 4.8(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to the Company for any Pre-Closing Period, and there are no pending or, to the Seller Parties' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of the Company. No extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. (c) The Company has made provision on the Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.8(c) (ii) of the Disclosure Schedule, the Company is not liable for Taxes of any other Person, and is neither currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Returns that the Company is or may be subject to taxation by that jurisdiction; and (iv) the Company has not filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person (except that the Partnership and the SPVs are treated as a single entity for U.S. federal income tax purposes). 4.9 Title to Properties; Absence of Encumbrances. (a) The Company does not own or lease any real property. (b) Except as set forth in Section 4.9(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in Schedule 2, and has either good title to or a valid leasehold, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on the Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by the Company is subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 Contracts. Each oral or written agreement to which the Partnership or any SPV is a party and which is material to the business of the Company as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by the Partnership or such SPV, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, the Partnership and each SPV are in compliance and are -11- not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which either of them is a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the actual knowledge of the General Partners and the Sellers, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the Disclosure Schedule, to the General Partner's knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified the Partnership or any SPV of any unresolved complaint regarding the performance of the Partnership or any SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, neither the Partnership nor any SPV has received any notice of any termination or non-renewal of any Contract and, to the actual knowledge of the General Partners and the Sellers, no other party to any Contract intends to terminate or not renew any such Contract. 4.11 Insurance. Each insurance policy currently maintained by the Partnership or an SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 Litigation. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the actual knowledge of the General Partners and the Sellers, threatened against the Partnership or any SPV or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV is identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 4.13 Environmental Matters. Except as would not be reasonably likely to have a Material Adverse Effect: (a) except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the Company are in compliance with applicable Environmental Laws which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof and the Company has not received any written notice of any violation of any Environmental Law; (b) except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Seller Parties' knowledge, threatened against the -12- Partnership, any SPV, or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed; and (c) except as set forth on Section 4.13(c) of the Disclosure Schedule, to the actual knowledge of the General Partners and Sellers, there are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Partnership, any SPV, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed. 4.14 Compliance with Law. (a) Except as would not be reasonably likely to have a Material Adverse Effect, the Company is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. The Company has not received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) the Company has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to the actual knowledge of the General Partners and the Sellers, threatened seeking the revocation or limitation of any such License. 4.15 Employees. The Company does not now have, nor has it since the date of its formation had, any employees. 4.16 Books and Records. The books and records of the Company with respect to the Company, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. ARTICLE 5 Representations and Warranties of each Seller Each Seller, severally and not jointly hereby represents and warrants to Purchaser as follows: 5.1 Authorization; Enforceability. If such Seller is an individual, he or she has full legal capacity to enter into and carry out his or her obligations under this Agreement. If such Seller is not an individual, such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and the execution and delivery of this Agreement by such Seller have been duly authorized by all necessary corporate or analogous action. This Agreement has been duly executed and delivered by such Seller and constitutes the -13- legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 5.2 No Conflicts. Neither the execution and delivery by such Seller of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate such Seller's certificate of incorporation, by-laws, or analogous constitutive or governing documents, or any resolutions of the board of directors of such Seller or person(s) exercising analogous powers, or (b) except as would not be reasonably likely to have a material adverse effect on such Seller's ability to consummate the transactions contemplated hereby, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of such Seller under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which such Seller is a party or by which any of its properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over such Seller or its properties. 5.3 Investment Purpose; Private Placement. (a) Such Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. In addition, except (i) as otherwise previously disclosed to the Purchaser in writing before the date of this Agreement or (ii) with respect to the potential sale by the Sellers in the overallotment option in connection with Purchaser's initial public offering, the Sellers are not under a binding commitment or obligation to sell, transfer, or otherwise dispose of the Purchaser Shares to be acquired by such Sellers pursuant to this Agreement. Notwithstanding the foregoing, each Seller has, subject to the Lockup Agreement, the right at all times to sell or otherwise dispose of all or any part of the Purchaser Shares pursuant to a registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and the right to dispose of its Purchaser Shares is within his, her or its control. (b) Such Seller acknowledges that the issuance of the Purchaser Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Such Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (c) Such Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. -14- (d) Such Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (e) Such Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Such Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by such Seller have been made available to such Seller and the persons that such Seller has retained to advise it with respect to such an acquisition, and that such Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) Such Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax considerations of an investment in the Purchaser Shares. Such Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Purchaser Shares. Such Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Article 8 or on any representations of any officer, director, employee, founder or agent of Purchaser. ARTICLE 6 Representations and Warranties of each LP Seller Each LP Seller, severally and not jointly, hereby represents and warrants to Purchaser as follows: 6.1 Title. The aggregate capital contribution amount set forth opposite such LP Seller's name in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. Such LP Seller has good, valid, and marketable title to and, subject to the terms of the Partnership Agreement, the right to transfer to Purchaser, all of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. At the Closing, such LP Seller will convey ownership of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. Subject to the terms of the Partnership Agreement, no Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from such LP Seller of any Interests. ARTICLE 7 Representations and Warranties of Georgiopoulos Georgiopoulos hereby represents and warrants to Purchaser as follows: 7.1 Capitalization; Title. The authorized capital of the Administrative General Partner consists of 50,000 shares, par value $1.00 per share, of which 1,000 shares are outstanding. All AGP Shares are validly issued and outstanding, fully paid, and non-assessable. -15- The Administrative General Partner has good, valid, and marketable title to all of the Interests the Administrative General Partner owns, free and clear of any and all Encumbrances. Georgiopoulos owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the AGP Shares, free and clear of any and all Encumbrances. At the Closing, Georgiopoulos will convey ownership of the AGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Georgiopoulos of any AGP Shares. 7.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the memorandum of association or articles of association of the Administrative General Partner or any resolutions of the directors or members of the Administrative General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Administrative General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Administrative General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Administrative General Partner or its properties. 7.3 Financial Condition. The Administrative General Partner has conducted no business other than serving as administrative general partner of Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as administrative general partner for the benefit of the Partnership in the Administrative General Partner's good faith judgment. ARTICLE 8 Representations and Warranties of MGP Stockholder MGP Stockholder hereby represents and warrants to Purchaser as follows: 8.1 Capitalization; Title. (a) The authorized capital of the Managing General Partner consists of 500 shares of stock, without par value, of which 100 shares are outstanding. All MGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Managing General Partner has good, valid, and marketable title to all of the Interests the Managing General Partner owns, free and clear of any and all Encumbrances. MGP Stockholder owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the MGP Shares, free and clear of any and all Encumbrances. At the Closing, MGP Stockholder will convey ownership of the MGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) -16- that is an agreement, arrangement, understanding, or option for the purchase or acquisition from MGP Stockholder of any MGP Shares. 8.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the articles of incorporation or by-laws of the Managing General Partner or any resolutions of the directors or members of the Managing General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Managing General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Managing General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over Managing General Partner or its properties. 8.3 Financial Condition. The Managing General Partner has conducted no business other than serving as managing general partner of the Partnership and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as managing general partner for the benefit of the Partnership in the Managing General Partner's good faith judgment. ARTICLE 9 Representations and Warranties of Purchaser Purchaser represents and warrants to the Sellers as follows: 9.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 9.2 Capitalization. The authorized capital of the Purchaser consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following the Closing the outstanding capital stock of the Purchaser shall be as set forth in the schedule delivered pursuant to Section 3.4. 9.3 Authorization. The execution and delivery of this Agreement by Purchaser have been duly authorized by all necessary corporate action required on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 9.4 No Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict -17- with or violate the Certificate of Incorporation or By-Laws of Purchaser, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Purchaser (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Purchaser to consummate the transactions contemplated hereby). 9.5 Litigation. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Purchaser, threatened against Purchaser or any of its properties or assets, or any director, officer or employee of Purchaser in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 9.6 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 9.7 Private Placement Purchaser is acquiring the Interests and the GP Shares solely for the purpose of ownership (directly or indirectly) of the Partnership as a whole for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Purchaser acknowledges that the Interests and the GP Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Purchaser acknowledges that the Interests and the GP Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. 9.8 Contribution Agreements. Each Contribution Agreement that Purchaser is entering into pursuant to the Plan of Recapitalization with partners of the Exchanging Partnerships (as defined in the Plan of Recapitalization) is substantially similar to this Agreement and contains substantially the same economic and legal terms. ARTICLE 10 Covenants The Parties hereby covenant and agree as follows: 10.1 Conduct of Business. From the date hereof until the Closing, each of the Company and the General Partners will conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Purchaser: -18- (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.3(b) with respect to, any Interests or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any Seller or general partner of the Partnership; (e) redeem, purchase or otherwise acquire, directly or indirectly, any Interest; or (f) enter into any commitment to do any of the foregoing. 10.2 No Solicitation of Alternative Transaction. For a period of one hundred and eighty (180) days following the date hereof, the Sellers shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Partnership, any general partner of the Partnership, any SPV, or their assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Partnership or any SPV (collectively, "Acquisition Proposals"). The Sellers shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. Notwithstanding the foregoing, any Seller who is in material breach of any representation warranty, covenant, or agreement hereunder shall be bound by this Section 10.2 regardless of the expiration of such one hundred eighty (180) day period. 10.3 Taxes and Cooperation on Tax Matters. (a) Tax Returns; Liability for Taxes. (1) At the Managing General Partner's election, the Managing General Partner shall be responsible for and shall have the ultimate discretion with respect to, all Returns required or permitted by applicable law to be filed by the Managing General Partner with respect to the Company for all taxable periods that end on or before the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Purchaser (which approval shall not be unreasonably withheld). If the Managing General Partner does not elect to prepare and file such Returns, the Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, such Returns; provided, however, that the preparation and filing of such Returns shall be -19- subject to review and approval of the Managing General Partner (which approval shall no be unreasonably withheld). (2) The Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, all Returns required to be filed by the Company for all taxable periods that begin before and end after the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall not be unreasonably withheld). (3) The Purchaser shall be responsible for, and shall have ultimate discretion with respect to, all Returns required to be filed by the Company for taxable periods that begin on or after the Closing Date. (4) All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of Returns of the Company (whether filed and prepared by the Managing General Partner or the Purchaser) shall be the responsibility of the Company. (5) Purchaser shall be liable and shall indemnify the Sellers for any and all Taxes imposed on the Company (but not the Sellers) for which the Sellers are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 10.3(a)(5) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any tax benefit (e.g., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). (6) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Purchaser, the Company, or the Sellers under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the Interests. (7) The Sellers shall notify Purchaser in writing of, and keep Purchaser fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Purchaser has indemnified the Sellers pursuant to this Section 9.03(a). Purchaser may control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Sellers informed on a current basis of the status of any such proceedings and (b) the Sellers and their counsel have the right to participate, at the Sellers' expense, in any such proceeding. The Sellers shall not settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Purchaser, which consent may not be unreasonably withheld. (b) New Elections. No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Company which may have an effect on the Company for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Purchaser. (c) Cooperation. -20- (1) Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 10.3 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Sellers (before the Closing) and Purchaser (after the Closing) shall each cause the Company (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Sellers, as the case may be, shall allow the other party to take possession of such books and records. (2) Purchaser and the Sellers further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Purchaser or the Sellers. 10.4 Execution of Documents. Each Seller shall execute and deliver to Purchaser the Registration Rights Agreement and the Lockup Agreement. The Purchaser shall execute and deliver to each Seller the Registration Rights Agreement. 10.5 HSR Act. The Sellers and Purchaser shall make all filings, cooperate fully with respect to all filings required by Sellers and Purchaser, and shall take any other actions required under the HSR Act with respect to the transactions contemplated hereunder. 10.6 Further Assurances. The Partnership and the Sellers agree to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Purchaser agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as the Partnership and the Sellers may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof 10.7 Restrictions on Securities Each Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend and that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE -21- "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." 10.8 Continuance of Business of the Partnerships. The Purchaser shall continue the historic business of the Partnerships or use a significant portion of the Partnerships' historic business assets in a business. 10.9 Overallotment Sales. If the LP Sellers have the opportunity to sell Purchaser Shares in the underwriters' overallotment option in the Purchaser's initial public offering, then at the closing of the issuance of any Purchaser Shares pursuant to such overallotment option, Purchaser shall make substantially similar representations and warranties to such selling LP Sellers as Purchaser makes to the underwriters and obtain for such selling LP Sellers an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling LP Sellers' use in their diligence review for sale under such overallotment option; provided, however, that such selling LP Sellers shall provide any information or materials reasonably requested by such accountants and counsel. 10.10 Failure to Close Initial Public Offering. After the Closing Date, in the event that the sale of Purchaser's Common Stock pursuant to the Underwriting Agreement does not close, (a) Peter Georgiopoulos will be the Chief Executive Officer of Purchaser pursuant to a previously negotiated employment agreement, (b) Purchaser will promptly call a meeting of stockholders for the purpose of electing a board of directors, and (c) the Sellers will negotiate in good faith to create appropriate corporate governance and stockholder arrangements that (x) will include tag-along rights and drag-along rights, (y) may include rights of first refusal, preemptive rights, and registration rights, and (z) will include limitations on affiliate transactions, in each case, the terms of which will be negotiated among the parties. ARTICLE 11 Conditions Precedent to Obligations of Purchaser The obligations of Purchaser under Article 2 and Article 3 and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 11.1 Representations and Warranties. Each and every representation and warranty of the Sellers and the Partnership contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are -22- made as of a specified date shall only be required to be true and correct in all material respects as of that date. 11.2 Compliance with Covenants. The Sellers and the Company shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. 11.3 Lack of Adverse Change. Since the date of the Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 11.4 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 11.5 Consents of Third Parties. All material consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 11.6 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 11.7 Lockup Agreement. The Sellers shall have executed and delivered to Purchaser the Lockup Agreement. 11.8 Registration Rights Agreement. The Sellers shall have executed and delivered to Purchaser the Registration Rights Agreement. 11.9 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 11.10 Waiver and Contribution Agreement. Each Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. -23- 11.11 Deed of Assignment and Adherence. Each LP Seller shall have executed and delivered to Purchaser the Deed of Assignment and Adherence. 11.12 Escrow Agreement. Each Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement. 11.13 Customary Closing Documents. Purchaser shall have received such other customary closing documents as Purchaser or its counsel may reasonably request (other than legal opinions). ARTICLE 12 Conditions Precedent to Obligations of the Sellers The obligations of the Sellers under Article 2 and Article 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Sellers: 12.1 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 12.2 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 12.3 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 12.4 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 12.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of the Sellers, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or -24- enforceability of this Agreement and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to the Sellers. 12.6 Registration Rights Agreement. Purchaser shall have executed and delivered to the Sellers the Registration Rights Agreement. 12.7 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 12.8 Deed of Assignment and Adherence. Purchaser shall have executed and delivered to each LP Seller the Deed of Assignment and Adherence. 12.9 Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement. 12.10 Closing Opinion. The Sellers shall have received the Closing Opinion. 12.11 Management Rights Agreement. Purchaser and the Liquidating Seller Stockholder shall have entered into the Management Rights Agreement. 12.12 Customary Closing Documents. Sellers shall have received such other customary closing documents as Sellers or their counsel may reasonably request (other than legal opinions in addition to the Closing Opinion). ARTICLE 13 Termination of Agreement 13.1 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and a Majority in Interest; (b) by Purchaser or a Majority in Interest, if the Closing shall not have been consummated by 180 days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party or Parties seeking to terminate this Agreement; or (c) by Purchaser on the one hand, or a Majority in Interest or Georgiopoulos on the other hand, if any Seller or Purchaser, respectively, fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 13.1(c) if it is also in material breach of any provision of this Agreement. 13.2 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and the Sellers shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or -25- covenant contained in this Agreement prior to termination. Furthermore, the provisions of Article 14 and Article 15 shall survive any termination of this Agreement. ARTICLE 14 Remedies 14.1 Survival. The representations and warranties of each Seller in Sections 5.1, 6.1, 7.1, and Section 8.1 and Purchaser in Sections 9.1 through 9.3 shall survive the Closing for a period of eighteen months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period alleging breach thereof, such additional amount of time required for the final resolution of any claim under Section 14.2. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial six-month period alleging breach hereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely, except that the covenant set forth in Section 10.8 shall survive for only one year. 14.2 Indemnification by Sellers. (a) Each Seller shall, severally and not jointly, indemnify and hold harmless Purchaser, the Company, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with (i) a breach by such Seller of any representation, warranty, or covenant made by such Seller in this Agreement or (ii) a breach by the Partnership of any representation, warranty, or covenant made by the Partnership in this Agreement in favor of Purchaser, in each case solely to the extent provided in Section 14.2(b) but subject to the exceptions in Section 14.2(d). (b) Except for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(i) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares allocable to such Seller equal to the amount of the applicable Loss divided by the IPO Price until the number of Indemnity Shares allocable to such Seller equals zero. Each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(ii) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price (in accordance with Section 9(D) of the Plan of Recapitalization) until the total number of Indemnity Shares equals zero. If any Indemnity Shares remain after the return thereof pursuant to the preceding sentences, such Indemnity Shares shall be re-allocated among the Sellers in accordance with the Plan of Recapitalization. Any fractional shares among such Indemnity Shares subject to release from escrow under this Section 14.2(b) shall be subject to Section 7 of the Plan of Recapitalization. -26- (c) With respect to indemnification for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, Purchaser shall first instruct the Escrow Agent to return to it Indemnity Shares allocable to such Seller in accordance with the first sentence of this Section 14.2(b). To the extent such return in Indemnity Shares does not fully offset the Loss, such Seller shall satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the remainder of the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to such Seller. To the extent such Seller and its affiliate transferees no longer owns Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, such Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any Seller be required to return to Purchaser more than such Seller's Purchaser Shares (or the cash equivalent of such Purchaser Shares based on the IPO Price if such Seller no longer owns such Purchaser Shares). (d) The remedies provided in this Section 14.2 are the exclusive remedy of the Purchaser with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 14.2 shall prohibit Purchaser from seeking specific performance or injunctive relief against any Seller or the Partnership in respect of a breach by such Seller or the Partnership of any covenant hereunder; and further provided, that nothing in this Section 14.2 shall limit Purchaser's remedies for a breach of covenant occurring prior to the Closing. 14.3 Indemnification by Purchaser. (a) Purchaser shall indemnify and hold harmless each Seller and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Purchaser of any representation, warranty, or covenant made by Purchaser in this Agreement, in each case solely to the extent provided in Section 14.3(b). (b) Purchaser's sole obligation and each Seller's sole remedy for a breach by Purchaser of a representation, warranty, or covenant hereunder shall be for Purchaser to pay such Seller the amount of such Seller's Loss in cash; provided that Purchaser's total obligations under this Section 14.3 shall in no event exceed the aggregate value of the Interests and the General Partner Shares; provided, however, that nothing in this Section 14.3(b) shall prohibit such Seller from seeking specific performance or injunctive relief against Purchaser in respect of a breach by Purchaser of any covenant hereunder; and further provided, that nothing in this Section 14.3(b) shall limit such Seller's remedies for a breach of covenant occurring prior to the Closing. ARTICLE 15 Miscellaneous 15.1 Limited Partners. The Parties acknowledge and agree that the LP Sellers are acting in all matters with respect to the Partnership hereunder as limited partners. -27- 15.2 Expenses. Except as set forth in Section 15.3, each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including fees of brokers, finders, advisers, attorneys, and accountants; provided that Purchaser shall pay the fees of U.S., Cayman Islands and Marshall Islands counsel to OCM Ajax Investments, Inc. 15.3 HSR Expenses. The Partnerships shall bear all expenses pro rata relating to filings in compliance with the HSR Act to be made in respect of the transactions contemplated hereunder; provided that Purchaser shall bear all such expenses if Purchaser completes the IPO (as defined in the Plan of Recapitalization). 15.4 Entirety of Agreement. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all representations, warranties, covenants, and agreements which have induced this Agreement. 15.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) If to Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to an LP Seller, to such LP Seller and its legal representative using the contact information set forth below such LP Seller's signature on the signature pages hereto. (c) If to Georgiopoulos or MGP Stockholder: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 -28- 15.6 No Exclusion of Vessels. If this Agreement relates to a Partnership that owns more than one Vessel, Purchaser shall have no right hereunder to close as to one or more such Vessels and exclude one or more other Vessels from the Partnership in connection with the transactions contemplated hereunder without amendment to the Agreement pursuant to Section 15.7. In addition, this Agreement may not be terminated except in accordance with Section 13.1. 15.7 Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by Purchaser, the Partnership, a Majority in Interest, and Georgiopoulos. 15.8 Waiver. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. 15.9 Assignment; Binding Nature; No Beneficiaries. This Agreement may not be assigned by any Party without the prior written consent of Purchaser, a Majority in Interest, and Georgiopoulos; provided, however, that Purchaser may assign its rights hereunder to any direct or indirect wholly-owned subsidiary of Purchaser which assumes the obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations, and further provided, that consideration provided for by Article 2 shall in any event be issued in shares of the original Purchaser hereunder which shall be the entity that sells shares to the underwriters pursuant to the Underwriting Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 15.10 Severability. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 15.11 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15.12 Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with -29- respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. 15.13 Negotiated Agreement. Purchaser and the Sellers acknowledge that they have been advised to seek advice of their own counsel, the language chosen by the Parties hereto expresses their mutual intent, and they accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. 15.14 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 15.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 15.16 Execution and Delivery. This Agreement may be executed in two or more 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. 15.17 Consent and Waiver to Certain Assignments of Partnership Interests. If the Partnership is named on Schedule 3, each LP Seller and the General Partners hereby (i) consents to the assignments of partnership interests contemplated by the assignments of partnership interests under any of the agreements listed in Schedule 3 (the "Assignments") and (ii) waives all its rights and interests under Section 9.01 of the limited partnership agreements of the Partnerships with respect to such assignments of partnership interests. [The remainder of this page has intentionally been left blank.] -30- IN WITNESS WHEREOF, all of the Parties hereto have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer BOSS, L.P. By GENMAR Boss Corporation, its Managing General Partner By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: [SIGNATURES OF LIMITED PARTNERS] PETER C. GEORGIOPOULOS in his individual capacity Witness: /s/ Peter C. Georgiopoulos /s/ Lambrini Hilias - ------------------------------------ ------------------------------- Printed Name: Lambrini Hilias -31- GENMAR BOSS LTD.] By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GENMAR BOSS CORPORATION in its capacity as Managing General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GMC ADMINISTRATION LTD. in its capacity as Administrative General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: -32- LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A -- Lockup Agreement Exhibit B -- Registration Rights Agreement Exhibit C -- Waiver and Contribution Agreement Exhibit D -- Closing Opinion DISCLOSURE SCHEDULE: Schedule 4.3(a) -- Capitalization; Title Schedule 4.3(b) -- Capitalization; Title (cont'd) Schedule 4.6(b) -- Financial Statements; Undisclosed Liabilities Schedule 4.8(a) -- Taxes Schedule 4.8(b) -- Taxes (cont'd) Schedule 4.8(c) -- Taxes (cont'd) Schedule 4.9(b) -- Title to Properties; Absence of Encumbrances Schedule 4.10 -- Contracts Schedule 4.12 -- Litigation Schedule 4.13(a) -- Environmental Matters Schedule 4.13(b) -- Environmental Matters (cont'd) Schedule 4.13(c) -- Environmental Matters (cont'd) SCHEDULES: Schedule 1 -- SPVs Schedule 2 -- Vessels Schedule 3 -- Certain Assignments of Partnership Interests - --------------- * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.5 7 a2050304zex-2_5.txt EXHIBIT 2.5 Exhibit 2.5 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD. GENERAL MARITIME I, L.P. THE LIMITED PARTNERS OF GENERAL MARITIME I, L.P. GENERAL MARITIME I CORPORATION (a Delaware corporation) as the sole stockholder of GENERAL MARITIME I CORPORATION (a Marshall Islands corporation) PETER C. GEORGIOPOULOS as the sole stockholder of GMC ADMINISTRATION LTD. GENERAL MARITIME I CORPORATION as Managing General Partner of GENERAL MARITIME I, L.P. and GMC ADMINISTRATION LTD. as Administrative General Partner of GENERAL MARITIME I, L.P. Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), General Maritime I, L.P., a Cayman Islands limited partnership (the "Partnership") by its Managing General Partner, the parties listed under the heading "LP Sellers" on the signature pages hereto (the "LP Sellers"), Peter C. Georgiopoulos, an individual with a business address of 35 West 56th Street New York, NY 10019 ("Georgiopoulos"), General Maritime I Corporation, a Delaware corporation ("MGP Stockholder") and together with Georgiopoulos and the LP Sellers, the "Sellers"), General Maritime I Corporation, a Marshall Islands corporation, in its capacity as Managing General Partner of the Partnership (the "Managing General Partner"), and GMC Administration Ltd., a Cayman Islands exempted company, in its capacity as Administrative General Partner of the Partnership (the "Administrative General Partner" and, together with the Managing General Partner, the "General Partners"). Purchaser, the Sellers, and the General Partners are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The LP Sellers are all of the limited partners of the Partnership and owners of all of the Interests (as hereinafter defined). B. Georgiopoulos owns, directly, all shares of the issued share capital (the "AGP Shares") of the Administrative General Partner and all shares of the outstanding capital stock of MGP Stockholder. C. MGP Stockholder owns, directly, all shares of the outstanding capital stock (the "MGP Shares", and together with the AGP Shares, the "General Partner Shares") of the Managing General Partner. D. The Partnership owns all of the issued and outstanding share capital of each entity listed in Schedule 1, (each an "SPV" and, together with the Partnership, the "Company") each of which owns a Vessel (as hereinafter defined). E. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, as further described in the Plan of Recapitalization. F. As part of the Recapitalization, Purchaser desires to exchange shares ("Purchaser Shares") of the common stock of Purchaser, par value $.01 per share (the "Purchaser Stock") for all of the Interests and General Partner Shares on the terms and conditions set forth herein and therein (the "Exchange"). G. The Parties intend that the Exchange will be treated either as an "exchange" pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code") or as part of a "reorganization" within the meaning of Section 368(a) of the Code. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 Definitions 1.1 "AGP Shares" shall have the meaning set forth in Recital B. 1.2 "Balance Sheet" means the adjusted unaudited consolidated balance sheet of the Company as of March 31, 2001 previously delivered to Purchaser. 1.3 "Closing" means the closing of the transactions contemplated hereby. 1.4 "Closing Date" means the date on which the Closing occurs. 1.5 "Closing Opinion" has the meaning set forth in Section 3.9. 1.6 "Company" has the meaning set forth in Recital D. 1.7 "Contracts" has the meaning set forth in Section 4.10. 1.8 "Deed of Assignment and Adherence" means the Deed of Assignment and Adherence to be executed by each LP Seller, the Purchaser, the Administrative General Partner, and the Managing General Partner in substantially the form of Exhibit F. 1.9 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Sellers have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or the violation or alleged violation of any Environmental Law. 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. -2- 1.13 "Escrow Agent" has the meaning assigned to such term in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Purchaser, the Sellers, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may reasonably be required by the Escrow Agent. 1.15 "Financial Statements" means the audited consolidated balance sheet and statements of earnings, partners' equity and cash flows of the Company as of, and for each of the fiscal years ended December 31, 2000, 1999, and 1998. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "General Partnership Shares" has the meaning set forth in Recital C. 1.18 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.20 "Indemnity Shares" means the Purchaser Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.21 "Interests" mean the limited partnership interests in the Partnership held by Limited Partners. 1.22 "Interim Financial Statements" means the unaudited consolidated financial statements of the Company as of, and for the period ended March 31, 2001 previously delivered to Purchaser. 1.23 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.24 "Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.25 "Licenses" has the meaning set forth in Section 4.14(b). 1.26 "Limited Partner" means a limited partner of the Partnership. 1.27 "Lockup Agreement" means the Lockup Agreement executed by the Sellers regarding the Purchaser Shares in the form of Exhibit A. -3- 1.28 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.29 "Majority in Interest" means LP Sellers holding a majority of the Interests. 1.30 "MGP Shares" has the meaning set forth in Recital C. 1.31 "MGP Stockholder" has the meaning set forth in the preamble. 1.32 "Material Adverse Effect" means any material adverse effect on the Company's business, operations, assets, financial condition, liabilities, or results of operations or on the ability of any Seller to perform its obligations hereunder. 1.33 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.34 "Partner" means a General Partner or a Limited Partner. 1.35 "Partnership Agreement" means the Limited Partnership Agreement of the Partnership dated May 14, 1997, as amended to date. 1.36 "Partnerships" means Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. 1.37 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. 1.38 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.39 "Purchaser Share" has the meaning set forth in Recital F. 1.40 "Purchaser Stock" has the meaning set forth in Recital F. 1.41 "Registration Rights Agreement" means the Registration Rights Agreement by and among the Sellers, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit B. -4- 1.42 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.43 "SPV" has the meaning set forth in Recital D. 1.44 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.45 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser, Lehman Brothers Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.46 "Vessel" means a motor tanker described in Schedule 2. 1.47 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Seller, substantially in the form of Exhibit C. 1.48 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Articles, Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Articles, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. ARTICLE 2 Exchange of Securities 2.1 Generally. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, (a) each LP Seller with full title guarantee shall sell, assign, transfer and deliver absolutely by the execution and delivery of the Deed of Assignment and Adherence to Purchaser, and Purchaser shall purchase and accept from each LP Seller, all of such LP Seller's Interests and all of such LP Seller's rights, title, and interest in the Interests free and -5- clear of all Encumbrances, (b) Georgiopoulos with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from Georgiopoulos all of the AGP Shares and all of Georgiopoulos' rights, title, and interest in the AGP Shares free and clear of all Encumbrances, and (c) MGP Stockholder with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from MGP Stockholder all of the MGP Shares and all of MGP Stockholder's rights, title, and interest in the MGP Shares free and clear of all Encumbrances in each case in exchange for the number of Purchaser Shares specified pursuant to Section 2.2. The obligations of the Sellers in this Section 2.1 are several, not joint. 2.2 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to each Seller in consideration of the sale, assignment, transfer, and delivery of all Interests and General Partner Shares to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference and made a part hereof. Purchaser shall deposit 10% of the Purchaser Shares to which the Sellers are entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Purchaser shall deposit an additional 10% of the total number of Purchaser Shares to which each Seller is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against a Seller under Section 14.2 within six months after the Closing, Purchaser shall instruct the Escrow Agent to release such Indemnity Shares to the Sellers entitled to them in accordance with the Plan of Recapitalization. Purchaser shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the relevant Seller to the extent Purchaser and such Seller or a court of competent jurisdiction finally resolves such claim in favor of such Seller without the possibility of appeal. Purchaser shall deposit an additional number of Purchaser Shares equal to the number of Collar Shares specified in Section 9(C)(vi)(a) of the Plan of Recapitalization in escrow in the Collar Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. 2.3 Substituted Partner. Each LP Seller in its capacity as a Limited Partner of the Partnership hereby (a) confirms and acknowledges its intention that the Purchaser or its assignees be admitted to the Partnership as a substituted Limited Partner of the Partnership, (b) gives its consent to the sale and transfer of the Interests to Purchaser and such admission, and (c) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred hereunder. Each LP Seller acknowledges and agrees that it will cease to be a partner of the Partnership as of the Closing. The Purchaser and its assignees agree that so long as any of them is a partner of the Partnership, such partner shall be bound by all of the terms and provisions of the Partnership Agreement as it shall be amended from time to time to the same extent and in the same manner as if the Purchaser or its assignees had been an original party to the Partnership Agreement in place of each LP Seller. 2.4 Administrative General Partner Consents. The Administrative General Partner, in its capacity as such, hereby (a) gives its consent to the sale and transfer of the Interests to Purchaser and to Purchaser's admission as a substituted limited partner of the Partnership, (b) -6- waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred under this Agreement, (c) waives any requirement under the Partnership Agreement that an opinion of counsel be delivered in connection with the sale and transfer of the Interests under this Agreement, and (d) other than execution of the Deed of Assignment and Adherence, agrees that no representations or other instruments of assignment are required by the Administrative General Partner for the sale and transfer of the Interests to Purchaser and Purchaser's admission as a limited partner of the Partnership other than as set forth in this Agreement, including the Exhibits hereto. 2.5 Fees and Expenses. Purchaser shall pay all reasonable legal fees and other expenses incurred by the Partnership in connection with Purchaser's substitution as a limited partner. ARTICLE 3 Closing The Closing shall be held at the Recapitalization Closing Time (as defined in the Plan of Recapitalization) at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022. The following shall take place at the Closing: 3.1 Transfer of Interests and Admission of Purchaser as Limited Partner. The transfer of all Interests to Purchaser and the admission of Purchaser as a Limited Partner shall be reflected in the Register of Partnership Interests on the books and records of the Partnership. 3.2 Delivery of Stock and Share Certificates. Georgiopoulos shall deliver or cause to be delivered to Purchaser share certificates representing all the equity interests of the Administrative General Partner (including all issued and outstanding AGP Shares), and MGP Stockholder shall deliver or cause to be delivered to Purchaser stock certificates representing all the equity interests of the Managing General Partner (including all issued and outstanding MGP Shares) accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer. 3.3 Delivery of Purchaser Shares. Purchaser shall deliver to the Escrow Agent certificates representing all of the Purchaser Shares to be issued hereunder. 3.4 Delivery of Schedule of Purchaser Shares. Purchaser shall deliver to the Partners a schedule reflecting issued and outstanding capital stock of Purchaser as of the Closing including the number of Purchaser Shares to be delivered to the Sellers and the number of Purchaser Shares delivered to the various escrow accounts for the benefit of each Seller as more particularly described in the Plan of Recapitalization. 3.5 Resignation of Directors and Officers of General Partners. The directors and officers of the General Partners shall resign as of the Closing, and Purchaser shall be entitled to designate their replacements. 3.6 Lockup Agreement. The Sellers shall execute and deliver to Purchaser the Lockup Agreement. -7- 3.7 Registration Rights Agreement. The Sellers and Purchaser shall execute and deliver the Registration Rights Agreement. 3.8 Legal Opinion. Marshall Islands counsel for the Purchaser shall deliver to the Sellers an opinion containing substantially the items set forth in Exhibit D in a form reasonably acceptable to counsel to the Liquidating Seller Stockholder (the "Closing Opinion"). 3.9 Deed of Assignment and Adherence. Each LP Seller and Purchaser shall execute and deliver the Deed of Assignment and Adherence. 3.10 Transfer Taxes. The Purchaser shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the Interests (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the Interests. ARTICLE 4 Representations and Warranties of the Partnership The Partnership hereby represents and warrants to Purchaser as follows: 4.1 Organization and Good Standing of Partnership. The Partnership is a partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands. The Partnership has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Partnership is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Copies of the certificate of registration of exempted limited partnership, each annual return and declaration of the Partnership since its formation, and the Partnership Agreement and all amendments thereto have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the Partners of the Partnership and all other records regarding the governance or ownership of the Partnership have been made available to Purchaser and are true, complete and accurate in all material respects. Other than the SPVs listed in Schedule 1, the Partnership has no subsidiaries and does not own any equity interest in any Person whatsoever. 4.2 Organization and Good Standing of SPVs. Each SPV is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not be reasonably likely to have a Material Adverse Effect. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to Purchaser and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. -8- 4.3 Capitalization, Title. (a) The total issued and outstanding equity of the Partnership consists of the Interests plus the interests of the Managing General Partner and the Administrative General Partner as set forth in Section 4.3(a) of the Disclosure Schedule. The aggregate capital contribution amount set forth in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. (b) The authorized capital and number of outstanding shares of capital of each SPV (the "SPV Shares") are as set forth in Section 4.3(b) of the Disclosure Schedule. All SPV Shares are validly issued and outstanding, fully paid, and non-assessable. The Partnership owns, beneficially and of record, and has good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from the Partnership of any SPV shares. (c) Except as set forth in the Partnership Agreement, there are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any equity of the Company or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of the Company or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of the Company. Except as set forth in the Partnership Agreement, there are no outstanding agreements among partners or members, registration rights agreements, or rights of first refusal pertaining to the Company's equity interests. None of the outstanding equity securities of the Company has been issued in violation of any rights of any Person or in violation of any Law. 4.4 Authorization; Enforceability. The execution and delivery of this Agreement by the Partnership has been duly authorized by all necessary partnership action required on the part of the Partnership. This Agreement has been duly executed and delivered by the Managing General Partner on behalf of the Partnership and constitutes the legal, valid, and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 4.5 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the certificate of registration of exempted limited partnership of the Partnership or the Partnership Agreement, any resolutions of the Partners of the Partnership, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of the Partnership or any SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Partnership or any SPV under (x) any -9- note, mortgage, deed of trust, lease or other agreement or instrument to which the Partnership or any SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Partnership, any SPV, or their respective properties. 4.6 Financial Statements; Undisclosed Liabilities. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Purchaser) have been prepared from the books and records of the Company on a consistent basis (and, in the case of the Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as at their respective dates and the results of operations (and, in the case of the Financial Statements, the cash flows) of the Company for the periods covered thereby. (b) As of the date of the Balance Sheet, other than those set forth in Section 4.6(b) of the Disclosure Schedule, the Company had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise and, in the case of any such liabilities, debts, or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of the Balance Sheet, the Company has conducted its businesses in the ordinary course consistent with past practice and has not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of the Balance Sheet, there has been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities or results of operations of the Company (other than general economic or industry conditions), and, to the actual knowledge of the General Partners and the Sellers, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. 4.7 Receivables and Payables. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.8 Taxes. (a) Except as set forth in Section 4.8(a) of the Disclosure Schedule, the Company has timely filed with the appropriate taxing authorities all material Returns required to be filed by it (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable as determined on the basis of Tax Law as in effect as of the date hereof, except for Taxes (i) which the Company believes in good faith are not due and payable because they are being diligently contested by appropriate -10- proceedings, (ii) for which the Company has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. (b) Except as set forth in Section 4.8(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to the Company for any Pre-Closing Period, and there are no pending or, to the Seller Parties' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of the Company. No extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. (c) The Company has made provision on the Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.8(c) (ii) of the Disclosure Schedule, the Company is not liable for Taxes of any other Person, and is neither currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Returns that the Company is or may be subject to taxation by that jurisdiction; and (iv) the Company has not filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person (except that the Partnership and the SPVs are treated as a single entity for U.S. federal income tax purposes). 4.9 Title to Properties; Absence of Encumbrances. (a) The Company does not own or lease any real property. (b) Except as set forth in Section 4.9(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in Schedule 2, and has either good title to or a valid leasehold, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on the Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by the Company is subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 Contracts. Each oral or written agreement to which the Partnership or any SPV is a party and which is material to the business of the Company as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by the Partnership or such SPV, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, the Partnership and each SPV are in compliance and are -11- not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which either of them is a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the actual knowledge of the General Partners and the Sellers, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the Disclosure Schedule, to the General Partner's knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified the Partnership or any SPV of any unresolved complaint regarding the performance of the Partnership or any SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, neither the Partnership nor any SPV has received any notice of any termination or non-renewal of any Contract and, to the actual knowledge of the General Partners and the Sellers, no other party to any Contract intends to terminate or not renew any such Contract. 4.11 Insurance. Each insurance policy currently maintained by the Partnership or an SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 Litigation. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the actual knowledge of the General Partners and the Sellers, threatened against the Partnership or any SPV or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV is identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 4.13 Environmental Matters. Except as would not be reasonably likely to have a Material Adverse Effect: (a) except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the Company are in compliance with applicable Environmental Laws which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof and the Company has not received any written notice of any violation of any Environmental Law; (b) except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Seller Parties' knowledge, threatened against the -12- Partnership, any SPV, or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed; and (c) except as set forth on Section 4.13(c) of the Disclosure Schedule, to the actual knowledge of the General Partners and Sellers, there are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Partnership, any SPV, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed. 4.14 Compliance with Law. (a) Except as would not be reasonably likely to have a Material Adverse Effect, the Company is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. The Company has not received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) the Company has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to the actual knowledge of the General Partners and the Sellers, threatened seeking the revocation or limitation of any such License. 4.15 Employees. The Company does not now have, nor has it since the date of its formation had, any employees. 4.16 Books and Records. The books and records of the Company with respect to the Company, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. ARTICLE 5 Representations and Warranties of each Seller Each Seller, severally and not jointly hereby represents and warrants to Purchaser as follows: 5.1 Authorization; Enforceability. If such Seller is an individual, he or she has full legal capacity to enter into and carry out his or her obligations under this Agreement. If such Seller is not an individual, such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and the execution and delivery of this Agreement by such Seller have been duly authorized by all necessary corporate or analogous action. This Agreement has been duly executed and delivered by such Seller and constitutes the -13- legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 5.2 No Conflicts. Neither the execution and delivery by such Seller of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate such Seller's certificate of incorporation, by-laws, or analogous constitutive or governing documents, or any resolutions of the board of directors of such Seller or person(s) exercising analogous powers, or (b) except as would not be reasonably likely to have a material adverse effect on such Seller's ability to consummate the transactions contemplated hereby, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of such Seller under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which such Seller is a party or by which any of its properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over such Seller or its properties. 5.3 Investment Purpose; Private Placement. (a) Such Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. In addition, except (i) as otherwise previously disclosed to the Purchaser in writing before the date of this Agreement or (ii) with respect to the potential sale by the Sellers in the overallotment option in connection with Purchaser's initial public offering, the Sellers are not under a binding commitment or obligation to sell, transfer, or otherwise dispose of the Purchaser Shares to be acquired by such Sellers pursuant to this Agreement. Notwithstanding the foregoing, each Seller has, subject to the Lockup Agreement, the right at all times to sell or otherwise dispose of all or any part of the Purchaser Shares pursuant to a registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and the right to dispose of its Purchaser Shares is within his, her or its control. (b) Such Seller acknowledges that the issuance of the Purchaser Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Such Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (c) Such Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. -14- (d) Such Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (e) Such Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Such Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by such Seller have been made available to such Seller and the persons that such Seller has retained to advise it with respect to such an acquisition, and that such Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) Such Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax considerations of an investment in the Purchaser Shares. Such Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Purchaser Shares. Such Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Article 8 or on any representations of any officer, director, employee, founder or agent of Purchaser. ARTICLE 6 Representations and Warranties of each LP Seller Each LP Seller, severally and not jointly, hereby represents and warrants to Purchaser as follows: 6.1 Title. The aggregate capital contribution amount set forth opposite such LP Seller's name in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. Such LP Seller has good, valid, and marketable title to and, subject to the terms of the Partnership Agreement, the right to transfer to Purchaser, all of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. At the Closing, such LP Seller will convey ownership of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. Subject to the terms of the Partnership Agreement, no Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from such LP Seller of any Interests. ARTICLE 7 Representations and Warranties of Georgiopoulos Georgiopoulos hereby represents and warrants to Purchaser as follows: 7.1 Capitalization; Title. The authorized capital of the Administrative General Partner consists of 50,000 shares, par value $1.00 per share, of which 1,000 shares are outstanding. All AGP Shares are validly issued and outstanding, fully paid, and non-assessable. -15- The Administrative General Partner has good, valid, and marketable title to all of the Interests the Administrative General Partner owns, free and clear of any and all Encumbrances. Georgiopoulos owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the AGP Shares, free and clear of any and all Encumbrances. At the Closing, Georgiopoulos will convey ownership of the AGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Georgiopoulos of any AGP Shares. 7.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the memorandum of association or articles of association of the Administrative General Partner or any resolutions of the directors or members of the Administrative General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Administrative General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Administrative General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Administrative General Partner or its properties. 7.3 Financial Condition. The Administrative General Partner has conducted no business other than serving as administrative general partner of Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as administrative general partner for the benefit of the Partnership in the Administrative General Partner's good faith judgment. ARTICLE 8 Representations and Warranties of MGP Stockholder MGP Stockholder hereby represents and warrants to Purchaser as follows: 8.1 Capitalization; Title. (a) The authorized capital of the Managing General Partner consists of 500 shares of stock, without par value, of which 100 shares are outstanding. All MGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Managing General Partner has good, valid, and marketable title to all of the Interests the Managing General Partner owns, free and clear of any and all Encumbrances. MGP Stockholder owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the MGP Shares, free and clear of any and all Encumbrances. At the Closing, MGP Stockholder will convey ownership of the MGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) -16- that is an agreement, arrangement, understanding, or option for the purchase or acquisition from MGP Stockholder of any MGP Shares. 8.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the articles of incorporation or by-laws of the Managing General Partner or any resolutions of the directors or members of the Managing General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Managing General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Managing General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over Managing General Partner or its properties. 8.3 Financial Condition. The Managing General Partner has conducted no business other than serving as managing general partner of the Partnership and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as managing general partner for the benefit of the Partnership in the Managing General Partner's good faith judgment. ARTICLE 9 Representations and Warranties of Purchaser Purchaser represents and warrants to the Sellers as follows: 9.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 9.2 Capitalization. The authorized capital of the Purchaser consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following the Closing the outstanding capital stock of the Purchaser shall be as set forth in the schedule delivered pursuant to Section 3.4. 9.3 Authorization. The execution and delivery of this Agreement by Purchaser have been duly authorized by all necessary corporate action required on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 9.4 No Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict -17- with or violate the Certificate of Incorporation or By-Laws of Purchaser, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Purchaser (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Purchaser to consummate the transactions contemplated hereby). 9.5 Litigation. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Purchaser, threatened against Purchaser or any of its properties or assets, or any director, officer or employee of Purchaser in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 9.6 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 9.7 Private Placement Purchaser is acquiring the Interests and the GP Shares solely for the purpose of ownership (directly or indirectly) of the Partnership as a whole for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Purchaser acknowledges that the Interests and the GP Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Purchaser acknowledges that the Interests and the GP Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. 9.8 Contribution Agreements. Each Contribution Agreement that Purchaser is entering into pursuant to the Plan of Recapitalization with partners of the Exchanging Partnerships (as defined in the Plan of Recapitalization) is substantially similar to this Agreement and contains substantially the same economic and legal terms. ARTICLE 10 Covenants The Parties hereby covenant and agree as follows: 10.1 Conduct of Business. From the date hereof until the Closing, each of the Company and the General Partners will conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Purchaser: -18- (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.3(b) with respect to, any Interests or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any Seller or general partner of the Partnership; (e) redeem, purchase or otherwise acquire, directly or indirectly, any Interest; or (f) enter into any commitment to do any of the foregoing. 10.2 No Solicitation of Alternative Transaction. For a period of one hundred and eighty (180) days following the date hereof, the Sellers shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Partnership, any general partner of the Partnership, any SPV, or their assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Partnership or any SPV (collectively, "Acquisition Proposals"). The Sellers shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. Notwithstanding the foregoing, any Seller who is in material breach of any representation warranty, covenant, or agreement hereunder shall be bound by this Section 10.2 regardless of the expiration of such one hundred eighty (180) day period. 10.3 Taxes and Cooperation on Tax Matters. (a) Tax Returns; Liability for Taxes. (1) At the Managing General Partner's election, the Managing General Partner shall be responsible for and shall have the ultimate discretion with respect to, all Returns required or permitted by applicable law to be filed by the Managing General Partner with respect to the Company for all taxable periods that end on or before the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Purchaser (which approval shall not be unreasonably withheld). If the Managing General Partner does not elect to prepare and file such Returns, the Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, such Returns; provided, however, that the preparation and filing of such Returns shall be -19- subject to review and approval of the Managing General Partner (which approval shall no be unreasonably withheld). (2) The Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, all Returns required to be filed by the Company for all taxable periods that begin before and end after the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall not be unreasonably withheld). (3) The Purchaser shall be responsible for, and shall have ultimate discretion with respect to, all Returns required to be filed by the Company for taxable periods that begin on or after the Closing Date. (4) All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of Returns of the Company (whether filed and prepared by the Managing General Partner or the Purchaser) shall be the responsibility of the Company. (5) Purchaser shall be liable and shall indemnify the Sellers for any and all Taxes imposed on the Company (but not the Sellers) for which the Sellers are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 10.3(a)(5) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any tax benefit (e.g., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). (6) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Purchaser, the Company, or the Sellers under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the Interests. (7) The Sellers shall notify Purchaser in writing of, and keep Purchaser fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Purchaser has indemnified the Sellers pursuant to this Section 9.03(a). Purchaser may control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Sellers informed on a current basis of the status of any such proceedings and (b) the Sellers and their counsel have the right to participate, at the Sellers' expense, in any such proceeding. The Sellers shall not settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Purchaser, which consent may not be unreasonably withheld. (b) New Elections. No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Company which may have an effect on the Company for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Purchaser. (c) Cooperation. -20- (1) Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 10.3 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Sellers (before the Closing) and Purchaser (after the Closing) shall each cause the Company (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Sellers, as the case may be, shall allow the other party to take possession of such books and records. (2) Purchaser and the Sellers further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Purchaser or the Sellers. 10.4 Execution of Documents. Each Seller shall execute and deliver to Purchaser the Registration Rights Agreement and the Lockup Agreement. The Purchaser shall execute and deliver to each Seller the Registration Rights Agreement. 10.5 HSR Act. The Sellers and Purchaser shall make all filings, cooperate fully with respect to all filings required by Sellers and Purchaser, and shall take any other actions required under the HSR Act with respect to the transactions contemplated hereunder. 10.6 Further Assurances. The Partnership and the Sellers agree to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Purchaser agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as the Partnership and the Sellers may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof 10.7 Restrictions on Securities Each Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend and that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE -21- "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." 10.8 Continuance of Business of the Partnerships. The Purchaser shall continue the historic business of the Partnerships or use a significant portion of the Partnerships' historic business assets in a business. 10.9 Overallotment Sales. If the LP Sellers have the opportunity to sell Purchaser Shares in the underwriters' overallotment option in the Purchaser's initial public offering, then at the closing of the issuance of any Purchaser Shares pursuant to such overallotment option, Purchaser shall make substantially similar representations and warranties to such selling LP Sellers as Purchaser makes to the underwriters and obtain for such selling LP Sellers an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling LP Sellers' use in their diligence review for sale under such overallotment option; provided, however, that such selling LP Sellers shall provide any information or materials reasonably requested by such accountants and counsel. 10.10 Failure to Close Initial Public Offering. After the Closing Date, in the event that the sale of Purchaser's Common Stock pursuant to the Underwriting Agreement does not close, (a) Peter Georgiopoulos will be the Chief Executive Officer of Purchaser pursuant to a previously negotiated employment agreement, (b) Purchaser will promptly call a meeting of stockholders for the purpose of electing a board of directors, and (c) the Sellers will negotiate in good faith to create appropriate corporate governance and stockholder arrangements that (x) will include tag-along rights and drag-along rights, (y) may include rights of first refusal, preemptive rights, and registration rights, and (z) will include limitations on affiliate transactions, in each case, the terms of which will be negotiated among the parties. ARTICLE 11 Conditions Precedent to Obligations of Purchaser The obligations of Purchaser under Article 2 and Article 3 and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 11.1 Representations and Warranties. Each and every representation and warranty of the Sellers and the Partnership contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are -22- made as of a specified date shall only be required to be true and correct in all material respects as of that date. 11.2 Compliance with Covenants. The Sellers and the Company shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. 11.3 Lack of Adverse Change. Since the date of the Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 11.4 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 11.5 Consents of Third Parties. All material consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 11.6 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 11.7 Lockup Agreement. The Sellers shall have executed and delivered to Purchaser the Lockup Agreement. 11.8 Registration Rights Agreement. The Sellers shall have executed and delivered to Purchaser the Registration Rights Agreement. 11.9 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 11.10 Waiver and Contribution Agreement. Each Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. -23- 11.11 Deed of Assignment and Adherence. Each LP Seller shall have executed and delivered to Purchaser the Deed of Assignment and Adherence. 11.12 Escrow Agreement. Each Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement. 11.13 Customary Closing Documents. Purchaser shall have received such other customary closing documents as Purchaser or its counsel may reasonably request (other than legal opinions). ARTICLE 12 Conditions Precedent to Obligations of the Sellers The obligations of the Sellers under Article 2 and Article 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Sellers: 12.1 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 12.2 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 12.3 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 12.4 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 12.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of the Sellers, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or -24- enforceability of this Agreement and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to the Sellers. 12.6 Registration Rights Agreement. Purchaser shall have executed and delivered to the Sellers the Registration Rights Agreement. 12.7 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 12.8 Deed of Assignment and Adherence. Purchaser shall have executed and delivered to each LP Seller the Deed of Assignment and Adherence. 12.9 Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement. 12.10 Closing Opinion. The Sellers shall have received the Closing Opinion. 12.11 Management Rights Agreement. Purchaser and the Liquidating Seller Stockholder shall have entered into the Management Rights Agreement. 12.12 Customary Closing Documents. Sellers shall have received such other customary closing documents as Sellers or their counsel may reasonably request (other than legal opinions in addition to the Closing Opinion). ARTICLE 13 Termination of Agreement 13.1 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and a Majority in Interest; (b) by Purchaser or a Majority in Interest, if the Closing shall not have been consummated by 180 days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party or Parties seeking to terminate this Agreement; or (c) by Purchaser on the one hand, or a Majority in Interest or Georgiopoulos on the other hand, if any Seller or Purchaser, respectively, fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 13.1(c) if it is also in material breach of any provision of this Agreement. 13.2 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and the Sellers shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or -25- covenant contained in this Agreement prior to termination. Furthermore, the provisions of Article 14 and Article 15 shall survive any termination of this Agreement. ARTICLE 14 Remedies 14.1 Survival. The representations and warranties of each Seller in Sections 5.1, 6.1, 7.1, and Section 8.1 and Purchaser in Sections 9.1 through 9.3 shall survive the Closing for a period of eighteen months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period alleging breach thereof, such additional amount of time required for the final resolution of any claim under Section 14.2. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial six-month period alleging breach hereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely, except that the covenant set forth in Section 10.8 shall survive for only one year. 14.2 Indemnification by Sellers. (a) Each Seller shall, severally and not jointly, indemnify and hold harmless Purchaser, the Company, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with (i) a breach by such Seller of any representation, warranty, or covenant made by such Seller in this Agreement or (ii) a breach by the Partnership of any representation, warranty, or covenant made by the Partnership in this Agreement in favor of Purchaser, in each case solely to the extent provided in Section 14.2(b) but subject to the exceptions in Section 14.2(d). (b) Except for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(i) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares allocable to such Seller equal to the amount of the applicable Loss divided by the IPO Price until the number of Indemnity Shares allocable to such Seller equals zero. Each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(ii) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price (in accordance with Section 9(D) of the Plan of Recapitalization) until the total number of Indemnity Shares equals zero. If any Indemnity Shares remain after the return thereof pursuant to the preceding sentences, such Indemnity Shares shall be re-allocated among the Sellers in accordance with the Plan of Recapitalization. Any fractional shares among such Indemnity Shares subject to release from escrow under this Section 14.2(b) shall be subject to Section 7 of the Plan of Recapitalization. -26- (c) With respect to indemnification for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, Purchaser shall first instruct the Escrow Agent to return to it Indemnity Shares allocable to such Seller in accordance with the first sentence of this Section 14.2(b). To the extent such return in Indemnity Shares does not fully offset the Loss, such Seller shall satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the remainder of the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to such Seller. To the extent such Seller and its affiliate transferees no longer owns Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, such Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any Seller be required to return to Purchaser more than such Seller's Purchaser Shares (or the cash equivalent of such Purchaser Shares based on the IPO Price if such Seller no longer owns such Purchaser Shares). (d) The remedies provided in this Section 14.2 are the exclusive remedy of the Purchaser with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 14.2 shall prohibit Purchaser from seeking specific performance or injunctive relief against any Seller or the Partnership in respect of a breach by such Seller or the Partnership of any covenant hereunder; and further provided, that nothing in this Section 14.2 shall limit Purchaser's remedies for a breach of covenant occurring prior to the Closing. 14.3 Indemnification by Purchaser. (a) Purchaser shall indemnify and hold harmless each Seller and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Purchaser of any representation, warranty, or covenant made by Purchaser in this Agreement, in each case solely to the extent provided in Section 14.3(b). (b) Purchaser's sole obligation and each Seller's sole remedy for a breach by Purchaser of a representation, warranty, or covenant hereunder shall be for Purchaser to pay such Seller the amount of such Seller's Loss in cash; provided that Purchaser's total obligations under this Section 14.3 shall in no event exceed the aggregate value of the Interests and the General Partner Shares; provided, however, that nothing in this Section 14.3(b) shall prohibit such Seller from seeking specific performance or injunctive relief against Purchaser in respect of a breach by Purchaser of any covenant hereunder; and further provided, that nothing in this Section 14.3(b) shall limit such Seller's remedies for a breach of covenant occurring prior to the Closing. ARTICLE 15 Miscellaneous 15.1 Limited Partners. The Parties acknowledge and agree that the LP Sellers are acting in all matters with respect to the Partnership hereunder as limited partners. -27- 15.2 Expenses. Except as set forth in Section 15.3, each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including fees of brokers, finders, advisers, attorneys, and accountants; provided that Purchaser shall pay the fees of U.S., Cayman Islands and Marshall Islands counsel to OCM Ajax Investments, Inc. 15.3 HSR Expenses. The Partnerships shall bear all expenses pro rata relating to filings in compliance with the HSR Act to be made in respect of the transactions contemplated hereunder; provided that Purchaser shall bear all such expenses if Purchaser completes the IPO (as defined in the Plan of Recapitalization). 15.4 Entirety of Agreement. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all representations, warranties, covenants, and agreements which have induced this Agreement. 15.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) If to Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to an LP Seller, to such LP Seller and its legal representative using the contact information set forth below such LP Seller's signature on the signature pages hereto. (c) If to Georgiopoulos or MGP Stockholder: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 -28- 15.6 No Exclusion of Vessels. If this Agreement relates to a Partnership that owns more than one Vessel, Purchaser shall have no right hereunder to close as to one or more such Vessels and exclude one or more other Vessels from the Partnership in connection with the transactions contemplated hereunder without amendment to the Agreement pursuant to Section 15.7. In addition, this Agreement may not be terminated except in accordance with Section 13.1. 15.7 Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by Purchaser, the Partnership, a Majority in Interest, and Georgiopoulos. 15.8 Waiver. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. 15.9 Assignment; Binding Nature; No Beneficiaries. This Agreement may not be assigned by any Party without the prior written consent of Purchaser, a Majority in Interest, and Georgiopoulos; provided, however, that Purchaser may assign its rights hereunder to any direct or indirect wholly-owned subsidiary of Purchaser which assumes the obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations, and further provided, that consideration provided for by Article 2 shall in any event be issued in shares of the original Purchaser hereunder which shall be the entity that sells shares to the underwriters pursuant to the Underwriting Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 15.10 Severability. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 15.11 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15.12 Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with -29- respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. 15.13 Negotiated Agreement. Purchaser and the Sellers acknowledge that they have been advised to seek advice of their own counsel, the language chosen by the Parties hereto expresses their mutual intent, and they accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. 15.14 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 15.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 15.16 Execution and Delivery. This Agreement may be executed in two or more 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. 15.17 Consent and Waiver to Certain Assignments of Partnership Interests. If the Partnership is named on Schedule 3, each LP Seller and each General Partner hereby (i) consents to the assignments of partnership interests contemplated by the assignments of partnership interests under any of the agreements listed in Schedule 3 (the "Assignments") and (ii) waives all its rights and interests under Section 9.01 of the limited partnership agreements of the Partnerships with respect to such assignments of partnership interests. [The remainder of this page has intentionally been left blank.] -30- IN WITNESS WHEREOF, all of the Parties hereto have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer GENERAL MARITIME I, L.P. By General Maritime I Corporation, its Managing General Partner By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: [SIGNATURES OF LIMITED PARTNERS] /s/ Peter C. Georgiopoulos /s/ Lambrini Hilias - ---------------------------------- ------------------------------- Printed Name: Lambrini Hilias -31- GENERAL MARITIME I, L.P. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GENERAL MARITIME I CORPORATION in its capacity as Managing General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GMC ADMINISTRATION LTD. in its capacity as Administrative General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: -32- LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A -- Lockup Agreement Exhibit B -- Registration Rights Agreement Exhibit C -- Waiver and Contribution Agreement Exhibit D -- Closing Opinion DISCLOSURE SCHEDULE: Schedule 4.3(a) -- Capitalization; Title Schedule 4.3(b) -- Capitalization; Title (cont'd) Schedule 4.6(b) -- Financial Statements; Undisclosed Liabilities Schedule 4.8(a) -- Taxes Schedule 4.8(b) -- Taxes (cont'd) Schedule 4.8(c) -- Taxes (cont'd) Schedule 4.9(b) -- Title to Properties; Absence of Encumbrances Schedule 4.10 -- Contracts Schedule 4.12 -- Litigation Schedule 4.13(a) -- Environmental Matters Schedule 4.13(b) -- Environmental Matters (cont'd) Schedule 4.13(c) -- Environmental Matters (cont'd) SCHEDULES: Schedule 1 -- SPVs Schedule 2 -- Vessels Schedule 3 -- Certain Assignments of Partnership Interests - --------------- * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.6 8 a2050304zex-2_6.txt EXHIBIT 2.6 Exhibit 2.6 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD. GENERAL MARITIME II, L.P. THE LIMITED PARTNERS OF GENERAL MARITIME II, L.P. GENERAL MARITIME II CORPORATION (a Delaware corporation) as the sole stockholder of GENERAL MARITIME II CORPORATION (a Marshall Islands corporation) PETER C. GEORGIOPOULOS as the sole stockholder of GMC ADMINISTRATION LTD. GENERAL MARITIME II CORPORATION as Managing General Partner of GENERAL MARITIME II, L.P. and GMC ADMINISTRATION LTD. as Administrative General Partner of GENERAL MARITIME II, L.P. Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), General Maritime II, L.P., a Cayman Islands limited partnership (the "Partnership") by its Managing General Partner, the parties listed under the heading "LP Sellers" on the signature pages hereto (the "LP Sellers"), Peter C. Georgiopoulos, an individual with a business address of 35 West 56th Street New York, NY 10019 ("Georgiopoulos"), General Maritime II Corporation, a Delaware corporation ("MGP Stockholder") and together with Georgiopoulos and the LP Sellers, the "Sellers"), General Maritime II Corporation, a Marshall Islands corporation, in its capacity as Managing General Partner of the Partnership (the "Managing General Partner"), and GMC Administration Ltd., a Cayman Islands exempted company, in its capacity as Administrative General Partner of the Partnership (the "Administrative General Partner" and, together with the Managing General Partner, the "General Partners"). Purchaser, the Sellers, and the General Partners are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The LP Sellers are all of the limited partners of the Partnership and owners of all of the Interests (as hereinafter defined). B. Georgiopoulos owns, directly, all shares of the issued share capital (the "AGP Shares") of the Administrative General Partner and all shares of the outstanding capital stock of MGP Stockholder. C. MGP Stockholder owns, directly, all shares of the outstanding capital stock (the "MGP Shares", and together with the AGP Shares, the "General Partner Shares") of the Managing General Partner. D. The Partnership owns all of the issued and outstanding share capital of each entity listed in Schedule 1, (each an "SPV" and, together with the Partnership, the "Company") each of which owns a Vessel (as hereinafter defined). E. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, as further described in the Plan of Recapitalization. F. As part of the Recapitalization, Purchaser desires to exchange shares ("Purchaser Shares") of the common stock of Purchaser, par value $.01 per share (the "Purchaser Stock") for all of the Interests and General Partner Shares on the terms and conditions set forth herein and therein (the "Exchange"). G. The Parties intend that the Exchange will be treated either as an "exchange" pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code") or as part of a "reorganization" within the meaning of Section 368(a) of the Code. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 Definitions 1.1 "AGP Shares" shall have the meaning set forth in Recital B. 1.2 "Balance Sheet" means the adjusted unaudited consolidated balance sheet of the Company as of March 31, 2001 previously delivered to Purchaser. 1.3 "Closing" means the closing of the transactions contemplated hereby. 1.4 "Closing Date" means the date on which the Closing occurs. 1.5 "Closing Opinion" has the meaning set forth in Section 3.9. 1.6 "Company" has the meaning set forth in Recital D. 1.7 "Contracts" has the meaning set forth in Section 4.10. 1.8 "Deed of Assignment and Adherence" means the Deed of Assignment and Adherence to be executed by each LP Seller, the Purchaser, the Administrative General Partner, and the Managing General Partner in substantially the form of Exhibit F. 1.9 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Sellers have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or the violation or alleged violation of any Environmental Law. 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. -2- 1.13 "Escrow Agent" has the meaning assigned to such term in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Purchaser, the Sellers, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may reasonably be required by the Escrow Agent. 1.15 "Financial Statements" means the audited consolidated balance sheet and statements of earnings, partners' equity and cash flows of the Company as of, and for each of the fiscal years ended December 31, 2000, 1999, and 1998. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "General Partnership Shares" has the meaning set forth in Recital C. 1.18 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.20 "Indemnity Shares" means the Purchaser Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.21 "Interests" mean the limited partnership interests in the Partnership held by Limited Partners. 1.22 "Interim Financial Statements" means the unaudited consolidated financial statements of the Company as of, and for the period ended March 31, 2001 previously delivered to Purchaser. 1.23 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.24 "Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.25 "Licenses" has the meaning set forth in Section 4.14(b). 1.26 "Limited Partner" means a limited partner of the Partnership. 1.27 "Lockup Agreement" means the Lockup Agreement executed by the Sellers regarding the Purchaser Shares in the form of Exhibit A. -3- 1.28 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.29 "Majority in Interest" means LP Sellers holding a majority of the Interests. 1.30 "MGP Shares" has the meaning set forth in Recital C. 1.31 "MGP Stockholder" has the meaning set forth in the preamble. 1.32 "Material Adverse Effect" means any material adverse effect on the Company's business, operations, assets, financial condition, liabilities, or results of operations or on the ability of any Seller to perform its obligations hereunder. 1.33 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.34 "Partner" means a General Partner or a Limited Partner. 1.35 "Partnership Agreement" means the Limited Partnership Agreement of the Partnership dated as of July 31, 1997, as amended to date. 1.36 "Partnerships" means Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. 1.37 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. 1.38 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.39 "Purchaser Share" has the meaning set forth in Recital F. 1.40 "Purchaser Stock" has the meaning set forth in Recital F. 1.41 "Registration Rights Agreement" means the Registration Rights Agreement by and among the Sellers, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit B. -4- 1.42 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.43 "SPV" has the meaning set forth in Recital D. 1.44 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.45 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser, Lehman Brothers Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.46 "Vessel" means a motor tanker described in Schedule 2. 1.47 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Seller, substantially in the form of Exhibit C. 1.48 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Articles, Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Articles, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. ARTICLE 2 Exchange of Securities 2.1 Generally. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, (a) each LP Seller with full title guarantee shall sell, assign, transfer and deliver absolutely by the execution and delivery of the Deed of Assignment and Adherence to Purchaser, and Purchaser shall purchase and accept from each LP Seller, all of such LP Seller's Interests and all of such LP Seller's rights, title, and interest in the Interests free and -5- clear of all Encumbrances, (b) Georgiopoulos with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from Georgiopoulos all of the AGP Shares and all of Georgiopoulos' rights, title, and interest in the AGP Shares free and clear of all Encumbrances, and (c) MGP Stockholder with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from MGP Stockholder all of the MGP Shares and all of MGP Stockholder's rights, title, and interest in the MGP Shares free and clear of all Encumbrances in each case in exchange for the number of Purchaser Shares specified pursuant to Section 2.2. The obligations of the Sellers in this Section 2.1 are several, not joint. 2.2 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to each Seller in consideration of the sale, assignment, transfer, and delivery of all Interests and General Partner Shares to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference and made a part hereof. Purchaser shall deposit 10% of the Purchaser Shares to which the Sellers are entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Purchaser shall deposit an additional 10% of the total number of Purchaser Shares to which each Seller is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against a Seller under Section 14.2 within six months after the Closing, Purchaser shall instruct the Escrow Agent to release such Indemnity Shares to the Sellers entitled to them in accordance with the Plan of Recapitalization. Purchaser shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the relevant Seller to the extent Purchaser and such Seller or a court of competent jurisdiction finally resolves such claim in favor of such Seller without the possibility of appeal. Purchaser shall deposit an additional number of Purchaser Shares equal to the number of Collar Shares specified in Section 9(C)(vi)(a) of the Plan of Recapitalization in escrow in the Collar Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. 2.3 Substituted Partner. Each LP Seller in its capacity as a Limited Partner of the Partnership hereby (a) confirms and acknowledges its intention that the Purchaser or its assignees be admitted to the Partnership as a substituted Limited Partner of the Partnership, (b) gives its consent to the sale and transfer of the Interests to Purchaser and such admission, and (c) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred hereunder. Each LP Seller acknowledges and agrees that it will cease to be a partner of the Partnership as of the Closing. The Purchaser and its assignees agree that so long as any of them is a partner of the Partnership, such partner shall be bound by all of the terms and provisions of the Partnership Agreement as it shall be amended from time to time to the same extent and in the same manner as if the Purchaser or its assignees had been an original party to the Partnership Agreement in place of each LP Seller. 2.4 Administrative General Partner Consents. The Administrative General Partner, in its capacity as such, hereby (a) gives its consent to the sale and transfer of the Interests to Purchaser and to Purchaser's admission as a substituted limited partner of the Partnership, (b) -6- waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred under this Agreement, (c) waives any requirement under the Partnership Agreement that an opinion of counsel be delivered in connection with the sale and transfer of the Interests under this Agreement, and (d) other than execution of the Deed of Assignment and Adherence, agrees that no representations or other instruments of assignment are required by the Administrative General Partner for the sale and transfer of the Interests to Purchaser and Purchaser's admission as a limited partner of the Partnership other than as set forth in this Agreement, including the Exhibits hereto. 2.5 Fees and Expenses. Purchaser shall pay all reasonable legal fees and other expenses incurred by the Partnership in connection with Purchaser's substitution as a limited partner. ARTICLE 3 Closing The Closing shall be held at the Recapitalization Closing Time (as defined in the Plan of Recapitalization) at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022. The following shall take place at the Closing: 3.1 Transfer of Interests and Admission of Purchaser as Limited Partner. The transfer of all Interests to Purchaser and the admission of Purchaser as a Limited Partner shall be reflected in the Register of Partnership Interests on the books and records of the Partnership. 3.2 Delivery of Stock and Share Certificates. Georgiopoulos shall deliver or cause to be delivered to Purchaser share certificates representing all the equity interests of the Administrative General Partner (including all issued and outstanding AGP Shares), and MGP Stockholder shall deliver or cause to be delivered to Purchaser stock certificates representing all the equity interests of the Managing General Partner (including all issued and outstanding MGP Shares) accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer. 3.3 Delivery of Purchaser Shares. Purchaser shall deliver to the Escrow Agent certificates representing all of the Purchaser Shares to be issued hereunder. 3.4 Delivery of Schedule of Purchaser Shares. Purchaser shall deliver to the Partners a schedule reflecting issued and outstanding capital stock of Purchaser as of the Closing including the number of Purchaser Shares to be delivered to the Sellers and the number of Purchaser Shares delivered to the various escrow accounts for the benefit of each Seller as more particularly described in the Plan of Recapitalization. 3.5 Resignation of Directors and Officers of General Partners. The directors and officers of the General Partners shall resign as of the Closing, and Purchaser shall be entitled to designate their replacements. 3.6 Lockup Agreement. The Sellers shall execute and deliver to Purchaser the Lockup Agreement. -7- 3.7 Registration Rights Agreement. The Sellers and Purchaser shall execute and deliver the Registration Rights Agreement. 3.8 Legal Opinion. Marshall Islands counsel for the Purchaser shall deliver to the Sellers an opinion containing substantially the items set forth in Exhibit D in a form reasonably acceptable to counsel to the Liquidating Seller Stockholder (the "Closing Opinion"). 3.9 Deed of Assignment and Adherence. Each LP Seller and Purchaser shall execute and deliver the Deed of Assignment and Adherence. 3.10 Transfer Taxes. The Purchaser shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the Interests (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the Interests. ARTICLE 4 Representations and Warranties of the Partnership The Partnership hereby represents and warrants to Purchaser as follows: 4.1 Organization and Good Standing of Partnership. The Partnership is a partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands. The Partnership has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Partnership is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Copies of the certificate of registration of exempted limited partnership, each annual return and declaration of the Partnership since its formation, and the Partnership Agreement and all amendments thereto have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the Partners of the Partnership and all other records regarding the governance or ownership of the Partnership have been made available to Purchaser and are true, complete and accurate in all material respects. Other than the SPVs listed in Schedule 1, the Partnership has no subsidiaries and does not own any equity interest in any Person whatsoever. 4.2 Organization and Good Standing of SPVs. Each SPV is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not be reasonably likely to have a Material Adverse Effect. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to Purchaser and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. -8- 4.3 Capitalization, Title. (a) The total issued and outstanding equity of the Partnership consists of the Interests plus the interests of the Managing General Partner and the Administrative General Partner as set forth in Section 4.3(a) of the Disclosure Schedule. The aggregate capital contribution amount set forth in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. (b) The authorized capital and number of outstanding shares of capital of each SPV (the "SPV Shares") are as set forth in Section 4.3(b) of the Disclosure Schedule. All SPV Shares are validly issued and outstanding, fully paid, and non-assessable. The Partnership owns, beneficially and of record, and has good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from the Partnership of any SPV shares. (c) Except as set forth in the Partnership Agreement, there are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any equity of the Company or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of the Company or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of the Company. Except as set forth in the Partnership Agreement, there are no outstanding agreements among partners or members, registration rights agreements, or rights of first refusal pertaining to the Company's equity interests. None of the outstanding equity securities of the Company has been issued in violation of any rights of any Person or in violation of any Law. 4.4 Authorization; Enforceability. The execution and delivery of this Agreement by the Partnership has been duly authorized by all necessary partnership action required on the part of the Partnership. This Agreement has been duly executed and delivered by the Managing General Partner on behalf of the Partnership and constitutes the legal, valid, and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 4.5 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the certificate of registration of exempted limited partnership of the Partnership or the Partnership Agreement, any resolutions of the Partners of the Partnership, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of the Partnership or any SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Partnership or any SPV under (x) any -9- note, mortgage, deed of trust, lease or other agreement or instrument to which the Partnership or any SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Partnership, any SPV, or their respective properties. 4.6 Financial Statements; Undisclosed Liabilities. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Purchaser) have been prepared from the books and records of the Company on a consistent basis (and, in the case of the Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as at their respective dates and the results of operations (and, in the case of the Financial Statements, the cash flows) of the Company for the periods covered thereby. (b) As of the date of the Balance Sheet, other than those set forth in Section 4.6(b) of the Disclosure Schedule, the Company had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise and, in the case of any such liabilities, debts, or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of the Balance Sheet, the Company has conducted its businesses in the ordinary course consistent with past practice and has not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of the Balance Sheet, there has been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities or results of operations of the Company (other than general economic or industry conditions), and, to the actual knowledge of the General Partners and the Sellers, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. 4.7 Receivables and Payables. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.8 Taxes. (a) Except as set forth in Section 4.8(a) of the Disclosure Schedule, the Company has timely filed with the appropriate taxing authorities all material Returns required to be filed by it (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable as determined on the basis of Tax Law as in effect as of the date hereof, except for Taxes (i) which the Company believes in good faith are not due and payable because they are being diligently contested by appropriate -10- proceedings, (ii) for which the Company has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. (b) Except as set forth in Section 4.8(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to the Company for any Pre-Closing Period, and there are no pending or, to the Seller Parties' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of the Company. No extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. (c) The Company has made provision on the Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.8(c) (ii) of the Disclosure Schedule, the Company is not liable for Taxes of any other Person, and is neither currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Returns that the Company is or may be subject to taxation by that jurisdiction; and (iv) the Company has not filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person (except that the Partnership and the SPVs are treated as a single entity for U.S. federal income tax purposes). 4.9 Title to Properties; Absence of Encumbrances. (a) The Company does not own or lease any real property. (b) Except as set forth in Section 4.9(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in Schedule 2, and has either good title to or a valid leasehold, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on the Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by the Company is subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 Contracts. Each oral or written agreement to which the Partnership or any SPV is a party and which is material to the business of the Company as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by the Partnership or such SPV, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, the Partnership and each SPV are in compliance and are -11- not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which either of them is a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the actual knowledge of the General Partners and the Sellers, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the Disclosure Schedule, to the General Partner's knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified the Partnership or any SPV of any unresolved complaint regarding the performance of the Partnership or any SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, neither the Partnership nor any SPV has received any notice of any termination or non-renewal of any Contract and, to the actual knowledge of the General Partners and the Sellers, no other party to any Contract intends to terminate or not renew any such Contract. 4.11 Insurance. Each insurance policy currently maintained by the Partnership or an SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 Litigation. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the actual knowledge of the General Partners and the Sellers, threatened against the Partnership or any SPV or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV is identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 4.13 Environmental Matters. Except as would not be reasonably likely to have a Material Adverse Effect: (a) except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the Company are in compliance with applicable Environmental Laws which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof and the Company has not received any written notice of any violation of any Environmental Law; (b) except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Seller Parties' knowledge, threatened against the -12- Partnership, any SPV, or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed; and (c) except as set forth on Section 4.13(c) of the Disclosure Schedule, to the actual knowledge of the General Partners and Sellers, there are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Partnership, any SPV, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed. 4.14 Compliance with Law. (a) Except as would not be reasonably likely to have a Material Adverse Effect, the Company is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. The Company has not received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) the Company has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to the actual knowledge of the General Partners and the Sellers, threatened seeking the revocation or limitation of any such License. 4.15 Employees. The Company does not now have, nor has it since the date of its formation had, any employees. 4.16 Books and Records. The books and records of the Company with respect to the Company, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. ARTICLE 5 Representations and Warranties of each Seller Each Seller, severally and not jointly hereby represents and warrants to Purchaser as follows: 5.1 Authorization; Enforceability. If such Seller is an individual, he or she has full legal capacity to enter into and carry out his or her obligations under this Agreement. If such Seller is not an individual, such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and the execution and delivery of this Agreement by such Seller have been duly authorized by all necessary corporate or analogous action. This Agreement has been duly executed and delivered by such Seller and constitutes the -13- legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 5.2 No Conflicts. Neither the execution and delivery by such Seller of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate such Seller's certificate of incorporation, by-laws, or analogous constitutive or governing documents, or any resolutions of the board of directors of such Seller or person(s) exercising analogous powers, or (b) except as would not be reasonably likely to have a material adverse effect on such Seller's ability to consummate the transactions contemplated hereby, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of such Seller under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which such Seller is a party or by which any of its properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over such Seller or its properties. 5.3 Investment Purpose; Private Placement. (a) Such Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. In addition, except (i) as otherwise previously disclosed to the Purchaser in writing before the date of this Agreement or (ii) with respect to the potential sale by the Sellers in the overallotment option in connection with Purchaser's initial public offering, the Sellers are not under a binding commitment or obligation to sell, transfer, or otherwise dispose of the Purchaser Shares to be acquired by such Sellers pursuant to this Agreement. Notwithstanding the foregoing, each Seller has, subject to the Lockup Agreement, the right at all times to sell or otherwise dispose of all or any part of the Purchaser Shares pursuant to a registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and the right to dispose of its Purchaser Shares is within his, her or its control. (b) Such Seller acknowledges that the issuance of the Purchaser Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Such Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (c) Such Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. -14- (d) Such Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (e) Such Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Such Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by such Seller have been made available to such Seller and the persons that such Seller has retained to advise it with respect to such an acquisition, and that such Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) Such Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax considerations of an investment in the Purchaser Shares. Such Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Purchaser Shares. Such Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Article 8 or on any representations of any officer, director, employee, founder or agent of Purchaser. ARTICLE 6 Representations and Warranties of each LP Seller Each LP Seller, severally and not jointly, hereby represents and warrants to Purchaser as follows: 6.1 Title. The aggregate capital contribution amount set forth opposite such LP Seller's name in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. Such LP Seller has good, valid, and marketable title to and, subject to the terms of the Partnership Agreement, the right to transfer to Purchaser, all of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. At the Closing, such LP Seller will convey ownership of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. Subject to the terms of the Partnership Agreement, no Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from such LP Seller of any Interests. ARTICLE 7 Representations and Warranties of Georgiopoulos Georgiopoulos hereby represents and warrants to Purchaser as follows: 7.1 Capitalization; Title. The authorized capital of the Administrative General Partner consists of 50,000 shares, par value $1.00 per share, of which 1,000 shares are outstanding. All AGP Shares are validly issued and outstanding, fully paid, and non-assessable. -15- The Administrative General Partner has good, valid, and marketable title to all of the Interests the Administrative General Partner owns, free and clear of any and all Encumbrances. Georgiopoulos owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the AGP Shares, free and clear of any and all Encumbrances. At the Closing, Georgiopoulos will convey ownership of the AGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Georgiopoulos of any AGP Shares. 7.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the memorandum of association or articles of association of the Administrative General Partner or any resolutions of the directors or members of the Administrative General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Administrative General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Administrative General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Administrative General Partner or its properties. 7.3 Financial Condition. The Administrative General Partner has conducted no business other than serving as administrative general partner of Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as administrative general partner for the benefit of the Partnership in the Administrative General Partner's good faith judgment. ARTICLE 8 Representations and Warranties of MGP Stockholder MGP Stockholder hereby represents and warrants to Purchaser as follows: 8.1 Capitalization; Title. (a) The authorized capital of the Managing General Partner consists of 500 shares of stock, without par value, of which 100 shares are outstanding. All MGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Managing General Partner has good, valid, and marketable title to all of the Interests the Managing General Partner owns, free and clear of any and all Encumbrances. MGP Stockholder owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the MGP Shares, free and clear of any and all Encumbrances. At the Closing, MGP Stockholder will convey ownership of the MGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) -16- that is an agreement, arrangement, understanding, or option for the purchase or acquisition from MGP Stockholder of any MGP Shares. 8.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the articles of incorporation or by-laws of the Managing General Partner or any resolutions of the directors or members of the Managing General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Managing General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Managing General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over Managing General Partner or its properties. 8.3 Financial Condition. The Managing General Partner has conducted no business other than serving as managing general partner of the Partnership and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as managing general partner for the benefit of the Partnership in the Managing General Partner's good faith judgment. ARTICLE 9 Representations and Warranties of Purchaser Purchaser represents and warrants to the Sellers as follows: 9.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 9.2 Capitalization. The authorized capital of the Purchaser consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following the Closing the outstanding capital stock of the Purchaser shall be as set forth in the schedule delivered pursuant to Section 3.4. 9.3 Authorization. The execution and delivery of this Agreement by Purchaser have been duly authorized by all necessary corporate action required on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 9.4 No Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict -17- with or violate the Certificate of Incorporation or By-Laws of Purchaser, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Purchaser (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Purchaser to consummate the transactions contemplated hereby). 9.5 Litigation. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Purchaser, threatened against Purchaser or any of its properties or assets, or any director, officer or employee of Purchaser in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 9.6 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 9.7 Private Placement Purchaser is acquiring the Interests and the GP Shares solely for the purpose of ownership (directly or indirectly) of the Partnership as a whole for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Purchaser acknowledges that the Interests and the GP Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Purchaser acknowledges that the Interests and the GP Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. 9.8 Contribution Agreements. Each Contribution Agreement that Purchaser is entering into pursuant to the Plan of Recapitalization with partners of the Exchanging Partnerships (as defined in the Plan of Recapitalization) is substantially similar to this Agreement and contains substantially the same economic and legal terms. ARTICLE 10 Covenants The Parties hereby covenant and agree as follows: 10.1 Conduct of Business. From the date hereof until the Closing, each of the Company and the General Partners will conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Purchaser: -18- (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.3(b) with respect to, any Interests or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any Seller or general partner of the Partnership; (e) redeem, purchase or otherwise acquire, directly or indirectly, any Interest; or (f) enter into any commitment to do any of the foregoing. 10.2 No Solicitation of Alternative Transaction. For a period of one hundred and eighty (180) days following the date hereof, the Sellers shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Partnership, any general partner of the Partnership, any SPV, or their assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Partnership or any SPV (collectively, "Acquisition Proposals"). The Sellers shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. Notwithstanding the foregoing, any Seller who is in material breach of any representation warranty, covenant, or agreement hereunder shall be bound by this Section 10.2 regardless of the expiration of such one hundred eighty (180) day period. 10.3 Taxes and Cooperation on Tax Matters. (a) Tax Returns; Liability for Taxes. (1) At the Managing General Partner's election, the Managing General Partner shall be responsible for and shall have the ultimate discretion with respect to, all Returns required or permitted by applicable law to be filed by the Managing General Partner with respect to the Company for all taxable periods that end on or before the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Purchaser (which approval shall not be unreasonably withheld). If the Managing General Partner does not elect to prepare and file such Returns, the Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, such Returns; provided, however, that the preparation and filing of such Returns shall be -19- subject to review and approval of the Managing General Partner (which approval shall no be unreasonably withheld). (2) The Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, all Returns required to be filed by the Company for all taxable periods that begin before and end after the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall not be unreasonably withheld). (3) The Purchaser shall be responsible for, and shall have ultimate discretion with respect to, all Returns required to be filed by the Company for taxable periods that begin on or after the Closing Date. (4) All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of Returns of the Company (whether filed and prepared by the Managing General Partner or the Purchaser) shall be the responsibility of the Company. (5) Purchaser shall be liable and shall indemnify the Sellers for any and all Taxes imposed on the Company (but not the Sellers) for which the Sellers are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 10.3(a)(5) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any tax benefit (e.g., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). (6) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Purchaser, the Company, or the Sellers under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the Interests. (7) The Sellers shall notify Purchaser in writing of, and keep Purchaser fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Purchaser has indemnified the Sellers pursuant to this Section 9.03(a). Purchaser may control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Sellers informed on a current basis of the status of any such proceedings and (b) the Sellers and their counsel have the right to participate, at the Sellers' expense, in any such proceeding. The Sellers shall not settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Purchaser, which consent may not be unreasonably withheld. (b) New Elections. No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Company which may have an effect on the Company for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Purchaser. (c) Cooperation. -20- (1) Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 10.3 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Sellers (before the Closing) and Purchaser (after the Closing) shall each cause the Company (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Sellers, as the case may be, shall allow the other party to take possession of such books and records. (2) Purchaser and the Sellers further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Purchaser or the Sellers. 10.4 Execution of Documents. Each Seller shall execute and deliver to Purchaser the Registration Rights Agreement and the Lockup Agreement. The Purchaser shall execute and deliver to each Seller the Registration Rights Agreement. 10.5 HSR Act. The Sellers and Purchaser shall make all filings, cooperate fully with respect to all filings required by Sellers and Purchaser, and shall take any other actions required under the HSR Act with respect to the transactions contemplated hereunder. 10.6 Further Assurances. The Partnership and the Sellers agree to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Purchaser agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as the Partnership and the Sellers may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof 10.7 Restrictions on Securities Each Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend and that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE -21- "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." 10.8 Continuance of Business of the Partnerships. The Purchaser shall continue the historic business of the Partnerships or use a significant portion of the Partnerships' historic business assets in a business. 10.9 Overallotment Sales. If the LP Sellers have the opportunity to sell Purchaser Shares in the underwriters' overallotment option in the Purchaser's initial public offering, then at the closing of the issuance of any Purchaser Shares pursuant to such overallotment option, Purchaser shall make substantially similar representations and warranties to such selling LP Sellers as Purchaser makes to the underwriters and obtain for such selling LP Sellers an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling LP Sellers' use in their diligence review for sale under such overallotment option; provided, however, that such selling LP Sellers shall provide any information or materials reasonably requested by such accountants and counsel. 10.10 Failure to Close Initial Public Offering. After the Closing Date, in the event that the sale of Purchaser's Common Stock pursuant to the Underwriting Agreement does not close, (a) Peter Georgiopoulos will be the Chief Executive Officer of Purchaser pursuant to a previously negotiated employment agreement, (b) Purchaser will promptly call a meeting of stockholders for the purpose of electing a board of directors, and (c) the Sellers will negotiate in good faith to create appropriate corporate governance and stockholder arrangements that (x) will include tag-along rights and drag-along rights, (y) may include rights of first refusal, preemptive rights, and registration rights, and (z) will include limitations on affiliate transactions, in each case, the terms of which will be negotiated among the parties. ARTICLE 11 Conditions Precedent to Obligations of Purchaser The obligations of Purchaser under Article 2 and Article 3 and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 11.1 Representations and Warranties. Each and every representation and warranty of the Sellers and the Partnership contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are -22- made as of a specified date shall only be required to be true and correct in all material respects as of that date. 11.2 Compliance with Covenants. The Sellers and the Company shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. 11.3 Lack of Adverse Change. Since the date of the Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 11.4 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 11.5 Consents of Third Parties. All material consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 11.6 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 11.7 Lockup Agreement. The Sellers shall have executed and delivered to Purchaser the Lockup Agreement. 11.8 Registration Rights Agreement. The Sellers shall have executed and delivered to Purchaser the Registration Rights Agreement. 11.9 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 11.10 Waiver and Contribution Agreement. Each Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. -23- 11.11 Deed of Assignment and Adherence. Each LP Seller shall have executed and delivered to Purchaser the Deed of Assignment and Adherence. 11.12 Escrow Agreement. Each Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement. 11.13 Customary Closing Documents. Purchaser shall have received such other customary closing documents as Purchaser or its counsel may reasonably request (other than legal opinions). ARTICLE 12 Conditions Precedent to Obligations of the Sellers The obligations of the Sellers under Article 2 and Article 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Sellers: 12.1 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 12.2 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 12.3 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 12.4 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 12.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of the Sellers, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or -24- enforceability of this Agreement and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to the Sellers. 12.6 Registration Rights Agreement. Purchaser shall have executed and delivered to the Sellers the Registration Rights Agreement. 12.7 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 12.8 Deed of Assignment and Adherence. Purchaser shall have executed and delivered to each LP Seller the Deed of Assignment and Adherence. 12.9 Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement. 12.10 Closing Opinion. The Sellers shall have received the Closing Opinion. 12.11 Management Rights Agreement. Purchaser and the Liquidating Seller Stockholder shall have entered into the Management Rights Agreement. 12.12 Customary Closing Documents. Sellers shall have received such other customary closing documents as Sellers or their counsel may reasonably request (other than legal opinions in addition to the Closing Opinion). ARTICLE 13 Termination of Agreement 13.1 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and a Majority in Interest; (b) by Purchaser or a Majority in Interest, if the Closing shall not have been consummated by 180 days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party or Parties seeking to terminate this Agreement; or (c) by Purchaser on the one hand, or a Majority in Interest or Georgiopoulos on the other hand, if any Seller or Purchaser, respectively, fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 13.1(c) if it is also in material breach of any provision of this Agreement. 13.2 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and the Sellers shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or -25- covenant contained in this Agreement prior to termination. Furthermore, the provisions of Article 14 and Article 15 shall survive any termination of this Agreement. ARTICLE 14 Remedies 14.1 Survival. The representations and warranties of each Seller in Sections 5.1, 6.1, 7.1, and Section 8.1 and Purchaser in Sections 9.1 through 9.3 shall survive the Closing for a period of eighteen months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period alleging breach thereof, such additional amount of time required for the final resolution of any claim under Section 14.2. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial six-month period alleging breach hereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely, except that the covenant set forth in Section 10.8 shall survive for only one year. 14.2 Indemnification by Sellers. (a) Each Seller shall, severally and not jointly, indemnify and hold harmless Purchaser, the Company, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with (i) a breach by such Seller of any representation, warranty, or covenant made by such Seller in this Agreement or (ii) a breach by the Partnership of any representation, warranty, or covenant made by the Partnership in this Agreement in favor of Purchaser, in each case solely to the extent provided in Section 14.2(b) but subject to the exceptions in Section 14.2(d). (b) Except for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(i) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares allocable to such Seller equal to the amount of the applicable Loss divided by the IPO Price until the number of Indemnity Shares allocable to such Seller equals zero. Each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(ii) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price (in accordance with Section 9(D) of the Plan of Recapitalization) until the total number of Indemnity Shares equals zero. If any Indemnity Shares remain after the return thereof pursuant to the preceding sentences, such Indemnity Shares shall be re-allocated among the Sellers in accordance with the Plan of Recapitalization. Any fractional shares among such Indemnity Shares subject to release from escrow under this Section 14.2(b) shall be subject to Section 7 of the Plan of Recapitalization. -26- (c) With respect to indemnification for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, Purchaser shall first instruct the Escrow Agent to return to it Indemnity Shares allocable to such Seller in accordance with the first sentence of this Section 14.2(b). To the extent such return in Indemnity Shares does not fully offset the Loss, such Seller shall satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the remainder of the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to such Seller. To the extent such Seller and its affiliate transferees no longer owns Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, such Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any Seller be required to return to Purchaser more than such Seller's Purchaser Shares (or the cash equivalent of such Purchaser Shares based on the IPO Price if such Seller no longer owns such Purchaser Shares). (d) The remedies provided in this Section 14.2 are the exclusive remedy of the Purchaser with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 14.2 shall prohibit Purchaser from seeking specific performance or injunctive relief against any Seller or the Partnership in respect of a breach by such Seller or the Partnership of any covenant hereunder; and further provided, that nothing in this Section 14.2 shall limit Purchaser's remedies for a breach of covenant occurring prior to the Closing. 14.3 Indemnification by Purchaser. (a) Purchaser shall indemnify and hold harmless each Seller and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Purchaser of any representation, warranty, or covenant made by Purchaser in this Agreement, in each case solely to the extent provided in Section 14.3(b). (b) Purchaser's sole obligation and each Seller's sole remedy for a breach by Purchaser of a representation, warranty, or covenant hereunder shall be for Purchaser to pay such Seller the amount of such Seller's Loss in cash; provided that Purchaser's total obligations under this Section 14.3 shall in no event exceed the aggregate value of the Interests and the General Partner Shares; provided, however, that nothing in this Section 14.3(b) shall prohibit such Seller from seeking specific performance or injunctive relief against Purchaser in respect of a breach by Purchaser of any covenant hereunder; and further provided, that nothing in this Section 14.3(b) shall limit such Seller's remedies for a breach of covenant occurring prior to the Closing. ARTICLE 15 Miscellaneous 15.1 Limited Partners. The Parties acknowledge and agree that the LP Sellers are acting in all matters with respect to the Partnership hereunder as limited partners. -27- 15.2 Expenses. Except as set forth in Section 15.3, each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including fees of brokers, finders, advisers, attorneys, and accountants; provided that Purchaser shall pay the fees of U.S., Cayman Islands and Marshall Islands counsel to OCM Ajax Investments, Inc. 15.3 HSR Expenses. The Partnerships shall bear all expenses pro rata relating to filings in compliance with the HSR Act to be made in respect of the transactions contemplated hereunder; provided that Purchaser shall bear all such expenses if Purchaser completes the IPO (as defined in the Plan of Recapitalization). 15.4 Entirety of Agreement. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all representations, warranties, covenants, and agreements which have induced this Agreement. 15.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) If to Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to an LP Seller, to such LP Seller and its legal representative using the contact information set forth below such LP Seller's signature on the signature pages hereto. (c) If to Georgiopoulos or MGP Stockholder: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 -28- 15.6 No Exclusion of Vessels. If this Agreement relates to a Partnership that owns more than one Vessel, Purchaser shall have no right hereunder to close as to one or more such Vessels and exclude one or more other Vessels from the Partnership in connection with the transactions contemplated hereunder without amendment to the Agreement pursuant to Section 15.7. In addition, this Agreement may not be terminated except in accordance with Section 13.1. 15.7 Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by Purchaser, the Partnership, a Majority in Interest, and Georgiopoulos. 15.8 Waiver. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. 15.9 Assignment; Binding Nature; No Beneficiaries. This Agreement may not be assigned by any Party without the prior written consent of Purchaser, a Majority in Interest, and Georgiopoulos; provided, however, that Purchaser may assign its rights hereunder to any direct or indirect wholly-owned subsidiary of Purchaser which assumes the obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations, and further provided, that consideration provided for by Article 2 shall in any event be issued in shares of the original Purchaser hereunder which shall be the entity that sells shares to the underwriters pursuant to the Underwriting Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 15.10 Severability. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 15.11 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15.12 Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with -29- respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. 15.13 Negotiated Agreement. Purchaser and the Sellers acknowledge that they have been advised to seek advice of their own counsel, the language chosen by the Parties hereto expresses their mutual intent, and they accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. 15.14 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 15.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 15.16 Execution and Delivery. This Agreement may be executed in two or more 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. 15.17 Consent and Waiver to Certain Assignments of Partnership Interests. If the Partnership is named on Schedule 3, each LP Seller and each General Partner hereby (i) consents to the assignments of partnership interests contemplated by the assignments of partnership interests under any of the agreements listed in Schedule 3 (the "Assignments") and (ii) waives all its rights and interests under Section 9.01 of the limited partnership agreements of the Partnerships with respect to such assignments of partnership interests. [The remainder of this page has intentionally been left blank.] -30- IN WITNESS WHEREOF, all of the Parties hereto have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer GENERAL MARITIME II, L.P. By General Maritime II Corporation, its Managing General Partner By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: [SIGNATURES OF LIMITED PARTNERS] PETER C. GEORGIOPOULOS in his individual capacity Witness: /s/ Peter C. Georgiopoulos /s/ Lambrini Hilias - ----------------------------------- ------------------------------ Printed Name: Lambrini Hilias -31- GENERAL MARITIME II CORPORATION By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GENERAL MARITIME II CORPORATION in its capacity as Managing General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GMC ADMINISTRATION LTD. in its capacity as Administrative General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: -32- LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A -- Lockup Agreement Exhibit B -- Registration Rights Agreement Exhibit C -- Waiver and Contribution Agreement Exhibit D -- Closing Opinion DISCLOSURE SCHEDULE: Schedule 4.3(a) -- Capitalization; Title Schedule 4.3(b) -- Capitalization; Title (cont'd) Schedule 4.6(b) -- Financial Statements; Undisclosed Liabilities Schedule 4.8(a) -- Taxes Schedule 4.8(b) -- Taxes (cont'd) Schedule 4.8(c) -- Taxes (cont'd) Schedule 4.9(b) -- Title to Properties; Absence of Encumbrances Schedule 4.10 -- Contracts Schedule 4.12 -- Litigation Schedule 4.13(a) -- Environmental Matters Schedule 4.13(b) -- Environmental Matters (cont'd) Schedule 4.13(c) -- Environmental Matters (cont'd) SCHEDULES: Schedule 1 -- SPVs Schedule 2 -- Vessels Schedule 3 -- Certain Assignments of Partnership Interests - --------------- * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.7 9 a2050304zex-2_7.txt EXHIBIT 2.7 Exhibit 2.7 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD. HARRIET, L.P. THE LIMITED PARTNERS OF HARRIET, L.P. GENMAR MARITIME III CORPORATION as the sole stockholder of GENMAR HARRIET CORPORATION PETER C. GEORGIOPOULOS as the sole stockholder of GMC ADMINISTRATION LTD. GENMAR HARRIET CORPORATION as Managing General Partner of HARRIET, L.P. and GMC ADMINISTRATION LTD. as Administrative General Partner of HARRIET, L.P. Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), Harriet, L.P., a Cayman Islands limited partnership (the "Partnership") by its Managing General Partner, the parties listed under the heading "LP Sellers" on the signature pages hereto (the "LP Sellers"), Peter C. Georgiopoulos, an individual with a business address of 35 West 56th Street New York, NY 10019 ("Georgiopoulos"), General Maritime III Corporation, a New York corporation ("MGP Stockholder") and together with Georgiopoulos and the LP Sellers, the "Sellers"), Genmar Harriet Corporation, a Marshall Islands corporation, in its capacity as Managing General Partner of the Partnership (the "Managing General Partner"), and GMC Administration Ltd., a Cayman Islands exempted company, in its capacity as Administrative General Partner of the Partnership (the "Administrative General Partner" and, together with the Managing General Partner, the "General Partners"). Purchaser, the Sellers, and the General Partners are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The LP Sellers are all of the limited partners of the Partnership and owners of all of the Interests (as hereinafter defined). B. Georgiopoulos owns, directly, all shares of the issued share capital (the "AGP Shares") of the Administrative General Partner and all shares of the outstanding capital stock of MGP Stockholder. C. MGP Stockholder owns, directly, all shares of the outstanding capital stock (the "MGP Shares", and together with the AGP Shares, the "General Partner Shares") of the Managing General Partner. D. The Partnership owns all of the issued and outstanding share capital of each entity listed in Schedule 1, (each an "SPV" and, together with the Partnership, the "Company") each of which owns a Vessel (as hereinafter defined). E. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, as further described in the Plan of Recapitalization. F. As part of the Recapitalization, Purchaser desires to exchange shares ("Purchaser Shares") of the common stock of Purchaser, par value $.01 per share (the "Purchaser Stock") for all of the Interests and General Partner Shares on the terms and conditions set forth herein and therein (the "Exchange"). G. The Parties intend that the Exchange will be treated either as an "exchange" pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code") or as part of a "reorganization" within the meaning of Section 368(a) of the Code. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 Definitions 1.1 "AGP Shares" shall have the meaning set forth in Recital B. 1.2 "Balance Sheet" means the adjusted unaudited consolidated balance sheet of the Company as of March 31, 2001 previously delivered to Purchaser. 1.3 "Closing" means the closing of the transactions contemplated hereby. 1.4 "Closing Date" means the date on which the Closing occurs. 1.5 "Closing Opinion" has the meaning set forth in Section 3.9. 1.6 "Company" has the meaning set forth in Recital D. 1.7 "Contracts" has the meaning set forth in Section 4.10. 1.8 "Deed of Assignment and Adherence" means the Deed of Assignment and Adherence to be executed by each LP Seller, the Purchaser, the Administrative General Partner, and the Managing General Partner in substantially the form of Exhibit F. 1.9 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Sellers have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or the violation or alleged violation of any Environmental Law. 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. - 2 - 1.13 "Escrow Agent" has the meaning assigned to such term in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Purchaser, the Sellers, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may reasonably be required by the Escrow Agent. 1.15 "Financial Statements" means the audited consolidated balance sheet and statements of earnings, partners' equity and cash flows of the Company as of, and for each of the fiscal years ended December 31, 2000, 1999, and 1998. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "General Partnership Shares" has the meaning set forth in Recital C. 1.18 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.20 "Indemnity Shares" means the Purchaser Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.21 "Interests" mean the limited partnership interests in the Partnership held by Limited Partners. 1.22 "Interim Financial Statements" means the unaudited consolidated financial statements of the Company as of, and for the period ended March 31, 2001 previously delivered to Purchaser. 1.23 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.24 "Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.25 "Licenses" has the meaning set forth in Section 4.14(b). 1.26 "Limited Partner" means a limited partner of the Partnership. 1.27 "Lockup Agreement" means the Lockup Agreement executed by the Sellers regarding the Purchaser Shares in the form of Exhibit A. - 3 - 1.28 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.29 "Majority in Interest" means LP Sellers holding a majority of the Interests. 1.30 "MGP Shares" has the meaning set forth in Recital C. 1.31 "MGP Stockholder" has the meaning set forth in the preamble. 1.32 "Material Adverse Effect" means any material adverse effect on the Company's business, operations, assets, financial condition, liabilities, or results of operations or on the ability of any Seller to perform its obligations hereunder. 1.33 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.34 "Partner" means a General Partner or a Limited Partner. 1.35 "Partnership Agreement" means the [Limited Partnership Agreement of the Partnership dated October 1, 1997, as amended to date. 1.36 "Partnerships" means Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. 1.37 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. 1.38 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.39 "Purchaser Share" has the meaning set forth in Recital F. 1.40 "Purchaser Stock" has the meaning set forth in Recital F. 1.41 "Registration Rights Agreement" means the Registration Rights Agreement by and among the Sellers, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit B. - 4 - 1.42 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.43 "SPV" has the meaning set forth in Recital D. 1.44 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.45 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser, Lehman Brothers Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.46 "Vessel" means a motor tanker described in Schedule 2. 1.47 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Seller, substantially in the form of Exhibit C. 1.48 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Articles, Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Articles, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. ARTICLE 2 Exchange of Securities 2.1 Generally. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, (a) each LP Seller with full title guarantee shall sell, assign, transfer and deliver absolutely by the execution and delivery of the Deed of Assignment and Adherence to Purchaser, and Purchaser shall purchase and accept from each LP Seller, all of such LP Seller's Interests and all of such LP Seller's rights, title, and interest in the Interests free and - 5 - clear of all Encumbrances, (b) Georgiopoulos with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from Georgiopoulos all of the AGP Shares and all of Georgiopoulos' rights, title, and interest in the AGP Shares free and clear of all Encumbrances, and (c) MGP Stockholder with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from MGP Stockholder all of the MGP Shares and all of MGP Stockholder's rights, title, and interest in the MGP Shares free and clear of all Encumbrances in each case in exchange for the number of Purchaser Shares specified pursuant to Section 2.2. The obligations of the Sellers in this Section 2.1 are several, not joint. 2.2 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to each Seller in consideration of the sale, assignment, transfer, and delivery of all Interests and General Partner Shares to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference and made a part hereof. Purchaser shall deposit 10% of the Purchaser Shares to which the Sellers are entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Purchaser shall deposit an additional 10% of the total number of Purchaser Shares to which each Seller is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against a Seller under Section 14.2 within six months after the Closing, Purchaser shall instruct the Escrow Agent to release such Indemnity Shares to the Sellers entitled to them in accordance with the Plan of Recapitalization. Purchaser shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the relevant Seller to the extent Purchaser and such Seller or a court of competent jurisdiction finally resolves such claim in favor of such Seller without the possibility of appeal. Purchaser shall deposit an additional number of Purchaser Shares equal to the number of Collar Shares specified in Section 9(C)(vi)(a) of the Plan of Recapitalization in escrow in the Collar Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. 2.3 Substituted Partner. Each LP Seller in its capacity as a Limited Partner of the Partnership hereby (a) confirms and acknowledges its intention that the Purchaser or its assignees be admitted to the Partnership as a substituted Limited Partner of the Partnership, (b) gives its consent to the sale and transfer of the Interests to Purchaser and such admission, and (c) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred hereunder. Each LP Seller acknowledges and agrees that it will cease to be a partner of the Partnership as of the Closing. The Purchaser and its assignees agree that so long as any of them is a partner of the Partnership, such partner shall be bound by all of the terms and provisions of the Partnership Agreement as it shall be amended from time to time to the same extent and in the same manner as if the Purchaser or its assignees had been an original party to the Partnership Agreement in place of each LP Seller. 2.4 Administrative General Partner Consents. The Administrative General Partner, in its capacity as such, hereby (a) gives its consent to the sale and transfer of the Interests to Purchaser and to Purchaser's admission as a substituted limited partner of the Partnership, (b) - 6 - waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred under this Agreement, (c) waives any requirement under the Partnership Agreement that an opinion of counsel be delivered in connection with the sale and transfer of the Interests under this Agreement, and (d) other than execution of the Deed of Assignment and Adherence, agrees that no representations or other instruments of assignment are required by the Administrative General Partner for the sale and transfer of the Interests to Purchaser and Purchaser's admission as a limited partner of the Partnership other than as set forth in this Agreement, including the Exhibits hereto. 2.5 Fees and Expenses. Purchaser shall pay all reasonable legal fees and other expenses incurred by the Partnership in connection with Purchaser's substitution as a limited partner. ARTICLE 3 Closing The Closing shall be held at the Recapitalization Closing Time (as defined in the Plan of Recapitalization) at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022. The following shall take place at the Closing: 3.1 Transfer of Interests and Admission of Purchaser as Limited Partner. The transfer of all Interests to Purchaser and the admission of Purchaser as a Limited Partner shall be reflected in the Register of Partnership Interests on the books and records of the Partnership. 3.2 Delivery of Stock and Share Certificates. Georgiopoulos shall deliver or cause to be delivered to Purchaser share certificates representing all the equity interests of the Administrative General Partner (including all issued and outstanding AGP Shares), and MGP Stockholder shall deliver or cause to be delivered to Purchaser stock certificates representing all the equity interests of the Managing General Partner (including all issued and outstanding MGP Shares) accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer. 3.3 Delivery of Purchaser Shares. Purchaser shall deliver to the Escrow Agent certificates representing all of the Purchaser Shares to be issued hereunder. 3.4 Delivery of Schedule of Purchaser Shares. Purchaser shall deliver to the Partners a schedule reflecting issued and outstanding capital stock of Purchaser as of the Closing including the number of Purchaser Shares to be delivered to the Sellers and the number of Purchaser Shares delivered to the various escrow accounts for the benefit of each Seller as more particularly described in the Plan of Recapitalization. 3.5 Resignation of Directors and Officers of General Partners. The directors and officers of the General Partners shall resign as of the Closing, and Purchaser shall be entitled to designate their replacements. 3.6 Lockup Agreement. The Sellers shall execute and deliver to Purchaser the Lockup Agreement. - 7 - 3.7 Registration Rights Agreement. The Sellers and Purchaser shall execute and deliver the Registration Rights Agreement. 3.8 Legal Opinion. Marshall Islands counsel for the Purchaser shall deliver to the Sellers an opinion containing substantially the items set forth in Exhibit D in a form reasonably acceptable to counsel to the Liquidating Seller Stockholder (the "Closing Opinion"). 3.9 Deed of Assignment and Adherence. Each LP Seller and Purchaser shall execute and deliver the Deed of Assignment and Adherence. 3.10 Transfer Taxes. The Purchaser shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the Interests (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the Interests. ARTICLE 4 Representations and Warranties of the Partnership The Partnership hereby represents and warrants to Purchaser as follows: 4.1 Organization and Good Standing of Partnership. The Partnership is a partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands. The Partnership has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Partnership is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Copies of the certificate of registration of exempted limited partnership, each annual return and declaration of the Partnership since its formation, and the Partnership Agreement and all amendments thereto have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the Partners of the Partnership and all other records regarding the governance or ownership of the Partnership have been made available to Purchaser and are true, complete and accurate in all material respects. Other than the SPVs listed in Schedule 1, the Partnership has no subsidiaries and does not own any equity interest in any Person whatsoever. 4.2 Organization and Good Standing of SPVs. Each SPV is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not be reasonably likely to have a Material Adverse Effect. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to Purchaser and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. - 8 - 4.3 Capitalization, Title. (a) The total issued and outstanding equity of the Partnership consists of the Interests plus the interests of the Managing General Partner and the Administrative General Partner as set forth in Section 4.3(a) of the Disclosure Schedule. The aggregate capital contribution amount set forth in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. (b) The authorized capital and number of outstanding shares of capital of each SPV (the "SPV Shares") are as set forth in Section 4.3(b) of the Disclosure Schedule. All SPV Shares are validly issued and outstanding, fully paid, and non-assessable. The Partnership owns, beneficially and of record, and has good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from the Partnership of any SPV shares. (c) Except as set forth in the Partnership Agreement, there are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any equity of the Company or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of the Company or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of the Company. Except as set forth in the Partnership Agreement, there are no outstanding agreements among partners or members, registration rights agreements, or rights of first refusal pertaining to the Company's equity interests. None of the outstanding equity securities of the Company has been issued in violation of any rights of any Person or in violation of any Law. 4.4 Authorization; Enforceability. The execution and delivery of this Agreement by the Partnership has been duly authorized by all necessary partnership action required on the part of the Partnership. This Agreement has been duly executed and delivered by the Managing General Partner on behalf of the Partnership and constitutes the legal, valid, and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 4.5 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the certificate of registration of exempted limited partnership of the Partnership or the Partnership Agreement, any resolutions of the Partners of the Partnership, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of the Partnership or any SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Partnership or any SPV under (x) any - 9 - note, mortgage, deed of trust, lease or other agreement or instrument to which the Partnership or any SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Partnership, any SPV, or their respective properties. 4.6 Financial Statements; Undisclosed Liabilities. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Purchaser) have been prepared from the books and records of the Company on a consistent basis (and, in the case of the Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as at their respective dates and the results of operations (and, in the case of the Financial Statements, the cash flows) of the Company for the periods covered thereby. (b) As of the date of the Balance Sheet, other than those set forth in Section 4.6(b) of the Disclosure Schedule, the Company had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise and, in the case of any such liabilities, debts, or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of the Balance Sheet, the Company has conducted its businesses in the ordinary course consistent with past practice and has not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of the Balance Sheet, there has been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities or results of operations of the Company (other than general economic or industry conditions), and, to the actual knowledge of the General Partners and the Sellers, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. 4.7 Receivables and Payables. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.8 Taxes. (a) Except as set forth in Section 4.8(a) of the Disclosure Schedule, the Company has timely filed with the appropriate taxing authorities all material Returns required to be filed by it (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable as determined on the basis of Tax Law as in effect as of the date hereof, except for Taxes (i) which the Company believes in good faith are not due and payable because they are being diligently contested by appropriate - 10 - proceedings, (ii) for which the Company has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. (b) Except as set forth in Section 4.8(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to the Company for any Pre-Closing Period, and there are no pending or, to the Seller Parties' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of the Company. No extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. (c) The Company has made provision on the Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.8(c) (ii) of the Disclosure Schedule, the Company is not liable for Taxes of any other Person, and is neither currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Returns that the Company is or may be subject to taxation by that jurisdiction; and (iv) the Company has not filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person (except that the Partnership and the SPVs are treated as a single entity for U.S. federal income tax purposes). 4.9 Title to Properties; Absence of Encumbrances. (a) The Company does not own or lease any real property. (b) Except as set forth in Section 4.9(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in Schedule 2, and has either good title to or a valid leasehold, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on the Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by the Company is subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 Contracts. Each oral or written agreement to which the Partnership or any SPV is a party and which is material to the business of the Company as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by the Partnership or such SPV, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, the Partnership and each SPV are in compliance and are - 11 - not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which either of them is a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the actual knowledge of the General Partners and the Sellers, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the Disclosure Schedule, to the General Partner's knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified the Partnership or any SPV of any unresolved complaint regarding the performance of the Partnership or any SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, neither the Partnership nor any SPV has received any notice of any termination or non-renewal of any Contract and, to the actual knowledge of the General Partners and the Sellers, no other party to any Contract intends to terminate or not renew any such Contract. 4.11 Insurance. Each insurance policy currently maintained by the Partnership or an SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 Litigation. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the actual knowledge of the General Partners and the Sellers, threatened against the Partnership or any SPV or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV is identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 4.13 Environmental Matters. Except as would not be reasonably likely to have a Material Adverse Effect: (a) except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the Company are in compliance with applicable Environmental Laws which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof and the Company has not received any written notice of any violation of any Environmental Law; (b) except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Seller Parties' knowledge, threatened against the - 12 - Partnership, any SPV, or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed; and (c) except as set forth on Section 4.13(c) of the Disclosure Schedule, to the actual knowledge of the General Partners and Sellers, there are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Partnership, any SPV, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed. 4.14 Compliance with Law. (a) Except as would not be reasonably likely to have a Material Adverse Effect, the Company is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. The Company has not received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) the Company has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to the actual knowledge of the General Partners and the Sellers, threatened seeking the revocation or limitation of any such License. 4.15 Employees. The Company does not now have, nor has it since the date of its formation had, any employees. 4.16 Books and Records. The books and records of the Company with respect to the Company, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. ARTICLE 5 Representations and Warranties of each Seller Each Seller, severally and not jointly hereby represents and warrants to Purchaser as follows: 5.1 Authorization; Enforceability. If such Seller is an individual, he or she has full legal capacity to enter into and carry out his or her obligations under this Agreement. If such Seller is not an individual, such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and the execution and delivery of this Agreement by such Seller have been duly authorized by all necessary corporate or analogous action. This Agreement has been duly executed and delivered by such Seller and constitutes the - 13 - legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 5.2 No Conflicts. Neither the execution and delivery by such Seller of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate such Seller's certificate of incorporation, by-laws, or analogous constitutive or governing documents, or any resolutions of the board of directors of such Seller or person(s) exercising analogous powers, or (b) except as would not be reasonably likely to have a material adverse effect on such Seller's ability to consummate the transactions contemplated hereby, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of such Seller under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which such Seller is a party or by which any of its properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over such Seller or its properties. 5.3 Investment Purpose; Private Placement. (a) Such Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. In addition, except (i) as otherwise previously disclosed to the Purchaser in writing before the date of this Agreement or (ii) with respect to the potential sale by the Sellers in the overallotment option in connection with Purchaser's initial public offering, the Sellers are not under a binding commitment or obligation to sell, transfer, or otherwise dispose of the Purchaser Shares to be acquired by such Sellers pursuant to this Agreement. Notwithstanding the foregoing, each Seller has, subject to the Lockup Agreement, the right at all times to sell or otherwise dispose of all or any part of the Purchaser Shares pursuant to a registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and the right to dispose of its Purchaser Shares is within his, her or its control. (b) Such Seller acknowledges that the issuance of the Purchaser Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Such Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (c) Such Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. - 14 - (d) Such Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (e) Such Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Such Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by such Seller have been made available to such Seller and the persons that such Seller has retained to advise it with respect to such an acquisition, and that such Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) Such Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax considerations of an investment in the Purchaser Shares. Such Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Purchaser Shares. Such Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Article 8 or on any representations of any officer, director, employee, founder or agent of Purchaser. ARTICLE 6 Representations and Warranties of each LP Seller Each LP Seller, severally and not jointly, hereby represents and warrants to Purchaser as follows: 6.1 Title. The aggregate capital contribution amount set forth opposite such LP Seller's name in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. Such LP Seller has good, valid, and marketable title to and, subject to the terms of the Partnership Agreement, the right to transfer to Purchaser, all of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. At the Closing, such LP Seller will convey ownership of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. Subject to the terms of the Partnership Agreement, no Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from such LP Seller of any Interests. ARTICLE 7 Representations and Warranties of Georgiopoulos Georgiopoulos hereby represents and warrants to Purchaser as follows: 7.1 Capitalization; Title. The authorized capital of the Administrative General Partner consists of 50,000 shares, par value $1.00 per share, of which 1,000 shares are outstanding. All AGP Shares are validly issued and outstanding, fully paid, and non-assessable. - 15 - The Administrative General Partner has good, valid, and marketable title to all of the Interests the Administrative General Partner owns, free and clear of any and all Encumbrances. Georgiopoulos owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the AGP Shares, free and clear of any and all Encumbrances. At the Closing, Georgiopoulos will convey ownership of the AGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Georgiopoulos of any AGP Shares. 7.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the memorandum of association or articles of association of the Administrative General Partner or any resolutions of the directors or members of the Administrative General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Administrative General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Administrative General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Administrative General Partner or its properties. 7.3 Financial Condition. The Administrative General Partner has conducted no business other than serving as administrative general partner of Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as administrative general partner for the benefit of the Partnership in the Administrative General Partner's good faith judgment. ARTICLE 8 Representations and Warranties of MGP Stockholder MGP Stockholder hereby represents and warrants to Purchaser as follows: 8.1 Capitalization; Title. (a) The authorized capital of the Managing General Partner consists of 500 shares of stock, without par value, of which 100 shares are outstanding. All MGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Managing General Partner has good, valid, and marketable title to all of the Interests the Managing General Partner owns, free and clear of any and all Encumbrances. MGP Stockholder owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the MGP Shares, free and clear of any and all Encumbrances. At the Closing, MGP Stockholder will convey ownership of the MGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) - 16 - that is an agreement, arrangement, understanding, or option for the purchase or acquisition from MGP Stockholder of any MGP Shares. 8.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the articles of incorporation or by-laws of the Managing General Partner or any resolutions of the directors or members of the Managing General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Managing General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Managing General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over Managing General Partner or its properties. 8.3 Financial Condition. The Managing General Partner has conducted no business other than serving as managing general partner of the Partnership and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as managing general partner for the benefit of the Partnership in the Managing General Partner's good faith judgment. ARTICLE 9 Representations and Warranties of Purchaser Purchaser represents and warrants to the Sellers as follows: 9.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 9.2 Capitalization. The authorized capital of the Purchaser consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following the Closing the outstanding capital stock of the Purchaser shall be as set forth in the schedule delivered pursuant to Section 3.4. 9.3 Authorization. The execution and delivery of this Agreement by Purchaser have been duly authorized by all necessary corporate action required on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 9.4 No Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict - 17 - with or violate the Certificate of Incorporation or By-Laws of Purchaser, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Purchaser (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Purchaser to consummate the transactions contemplated hereby). 9.5 Litigation. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Purchaser, threatened against Purchaser or any of its properties or assets, or any director, officer or employee of Purchaser in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 9.6 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 9.7 Private Placement Purchaser is acquiring the Interests and the GP Shares solely for the purpose of ownership (directly or indirectly) of the Partnership as a whole for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Purchaser acknowledges that the Interests and the GP Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Purchaser acknowledges that the Interests and the GP Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. 9.8 Contribution Agreements. Each Contribution Agreement that Purchaser is entering into pursuant to the Plan of Recapitalization with partners of the Exchanging Partnerships (as defined in the Plan of Recapitalization) is substantially similar to this Agreement and contains substantially the same economic and legal terms. ARTICLE 10 Covenants The Parties hereby covenant and agree as follows: 10.1 Conduct of Business. From the date hereof until the Closing, each of the Company and the General Partners will conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Purchaser: - 18 - (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.3(b) with respect to, any Interests or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any Seller or general partner of the Partnership; (e) redeem, purchase or otherwise acquire, directly or indirectly, any Interest; or (f) enter into any commitment to do any of the foregoing. 10.2 No Solicitation of Alternative Transaction. For a period of one hundred and eighty (180) days following the date hereof, the Sellers shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Partnership, any general partner of the Partnership, any SPV, or their assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Partnership or any SPV (collectively, "Acquisition Proposals"). The Sellers shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. Notwithstanding the foregoing, any Seller who is in material breach of any representation warranty, covenant, or agreement hereunder shall be bound by this Section 10.2 regardless of the expiration of such one hundred eighty (180) day period. 10.3 Taxes and Cooperation on Tax Matters. (a) Tax Returns; Liability for Taxes. (1) At the Managing General Partner's election, the Managing General Partner shall be responsible for and shall have the ultimate discretion with respect to, all Returns required or permitted by applicable law to be filed by the Managing General Partner with respect to the Company for all taxable periods that end on or before the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Purchaser (which approval shall not be unreasonably withheld). If the Managing General Partner does not elect to prepare and file such Returns, the Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, such Returns; provided, however, that the preparation and filing of such Returns shall be - 19 - subject to review and approval of the Managing General Partner (which approval shall no be unreasonably withheld). (2) The Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, all Returns required to be filed by the Company for all taxable periods that begin before and end after the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall not be unreasonably withheld). (3) The Purchaser shall be responsible for, and shall have ultimate discretion with respect to, all Returns required to be filed by the Company for taxable periods that begin on or after the Closing Date. (4) All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of Returns of the Company (whether filed and prepared by the Managing General Partner or the Purchaser) shall be the responsibility of the Company. (5) Purchaser shall be liable and shall indemnify the Sellers for any and all Taxes imposed on the Company (but not the Sellers) for which the Sellers are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 10.3(a)(5) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any tax benefit (e.g., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). (6) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Purchaser, the Company, or the Sellers under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the Interests. (7) The Sellers shall notify Purchaser in writing of, and keep Purchaser fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Purchaser has indemnified the Sellers pursuant to this Section 9.03(a). Purchaser may control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Sellers informed on a current basis of the status of any such proceedings and (b) the Sellers and their counsel have the right to participate, at the Sellers' expense, in any such proceeding. The Sellers shall not settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Purchaser, which consent may not be unreasonably withheld. (b) New Elections. No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Company which may have an effect on the Company for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Purchaser. (c) Cooperation. - 20 - (1) Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 10.3 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Sellers (before the Closing) and Purchaser (after the Closing) shall each cause the Company (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Sellers, as the case may be, shall allow the other party to take possession of such books and records. (2) Purchaser and the Sellers further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Purchaser or the Sellers. 10.4 Execution of Documents. Each Seller shall execute and deliver to Purchaser the Registration Rights Agreement and the Lockup Agreement. The Purchaser shall execute and deliver to each Seller the Registration Rights Agreement. 10.5 HSR Act. The Sellers and Purchaser shall make all filings, cooperate fully with respect to all filings required by Sellers and Purchaser, and shall take any other actions required under the HSR Act with respect to the transactions contemplated hereunder. 10.6 Further Assurances. The Partnership and the Sellers agree to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Purchaser agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as the Partnership and the Sellers may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof 10.7 Restrictions on Securities Each Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend and that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE - 21 - "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." 10.8 Continuance of Business of the Partnerships. The Purchaser shall continue the historic business of the Partnerships or use a significant portion of the Partnerships' historic business assets in a business. 10.9 Overallotment Sales. If the LP Sellers have the opportunity to sell Purchaser Shares in the underwriters' overallotment option in the Purchaser's initial public offering, then at the closing of the issuance of any Purchaser Shares pursuant to such overallotment option, Purchaser shall make substantially similar representations and warranties to such selling LP Sellers as Purchaser makes to the underwriters and obtain for such selling LP Sellers an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling LP Sellers' use in their diligence review for sale under such overallotment option; provided, however, that such selling LP Sellers shall provide any information or materials reasonably requested by such accountants and counsel. 10.10 Failure to Close Initial Public Offering. After the Closing Date, in the event that the sale of Purchaser's Common Stock pursuant to the Underwriting Agreement does not close, (a) Peter Georgiopoulos will be the Chief Executive Officer of Purchaser pursuant to a previously negotiated employment agreement, (b) Purchaser will promptly call a meeting of stockholders for the purpose of electing a board of directors, and (c) the Sellers will negotiate in good faith to create appropriate corporate governance and stockholder arrangements that (x) will include tag-along rights and drag-along rights, (y) may include rights of first refusal, preemptive rights, and registration rights, and (z) will include limitations on affiliate transactions, in each case, the terms of which will be negotiated among the parties. ARTICLE 11 Conditions Precedent to Obligations of Purchaser The obligations of Purchaser under Article 2 and Article 3 and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 11.1 Representations and Warranties. Each and every representation and warranty of the Sellers and the Partnership contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. - 22 - 11.2 Compliance with Covenants. The Sellers and the Company shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. 11.3 Lack of Adverse Change. Since the date of the Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 11.4 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 11.5 Consents of Third Parties. All material consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 11.6 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 11.7 Lockup Agreement. The Sellers shall have executed and delivered to Purchaser the Lockup Agreement. 11.8 Registration Rights Agreement. The Sellers shall have executed and delivered to Purchaser the Registration Rights Agreement. 11.9 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 11.10 Waiver and Contribution Agreement. Each Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. 11.11 Deed of Assignment and Adherence. Each LP Seller shall have executed and delivered to Purchaser the Deed of Assignment and Adherence. - 23 - 11.12 Escrow Agreement. Each Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement. 11.13 Customary Closing Documents. Purchaser shall have received such other customary closing documents as Purchaser or its counsel may reasonably request (other than legal opinions). ARTICLE 12 Conditions Precedent to Obligations of the Sellers The obligations of the Sellers under Article 2 and Article 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Sellers: 12.1 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 12.2 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 12.3 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 12.4 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 12.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of the Sellers, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to the Sellers. - 24 - 12.6 Registration Rights Agreement. Purchaser shall have executed and delivered to the Sellers the Registration Rights Agreement. 12.7 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 12.8 Deed of Assignment and Adherence. Purchaser shall have executed and delivered to each LP Seller the Deed of Assignment and Adherence. 12.9 Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement. 12.10 Closing Opinion. The Sellers shall have received the Closing Opinion. 12.11 Management Rights Agreement. Purchaser and the Liquidating Seller Stockholder shall have entered into the Management Rights Agreement. 12.12 Customary Closing Documents. Sellers shall have received such other customary closing documents as Sellers or their counsel may reasonably request (other than legal opinions in addition to the Closing Opinion). ARTICLE 13 Termination of Agreement 13.1 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and a Majority in Interest; (b) by Purchaser or a Majority in Interest, if the Closing shall not have been consummated by 180 days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party or Parties seeking to terminate this Agreement; or (c) by Purchaser on the one hand, or a Majority in Interest or Georgiopoulos on the other hand, if any Seller or Purchaser, respectively, fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 13.1(c) if it is also in material breach of any provision of this Agreement. 13.2 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and the Sellers shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Article 14 and Article 15 shall survive any termination of this Agreement. - 25 - ARTICLE 14 Remedies 14.1 Survival. The representations and warranties of each Seller in Sections 5.1, 6.1, 7.1, and Section 8.1 and Purchaser in Sections 9.1 through 9.3 shall survive the Closing for a period of eighteen months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period alleging breach thereof, such additional amount of time required for the final resolution of any claim under Section 14.2. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial six-month period alleging breach hereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely, except that the covenant set forth in Section 10.8 shall survive for only one year. 14.2 Indemnification by Sellers. (a) Each Seller shall, severally and not jointly, indemnify and hold harmless Purchaser, the Company, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with (i) a breach by such Seller of any representation, warranty, or covenant made by such Seller in this Agreement or (ii) a breach by the Partnership of any representation, warranty, or covenant made by the Partnership in this Agreement in favor of Purchaser, in each case solely to the extent provided in Section 14.2(b) but subject to the exceptions in Section 14.2(d). (b) Except for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(i) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares allocable to such Seller equal to the amount of the applicable Loss divided by the IPO Price until the number of Indemnity Shares allocable to such Seller equals zero. Each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(ii) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price (in accordance with Section 9(D) of the Plan of Recapitalization) until the total number of Indemnity Shares equals zero. If any Indemnity Shares remain after the return thereof pursuant to the preceding sentences, such Indemnity Shares shall be re-allocated among the Sellers in accordance with the Plan of Recapitalization. Any fractional shares among such Indemnity Shares subject to release from escrow under this Section 14.2(b) shall be subject to Section 7 of the Plan of Recapitalization. (c) With respect to indemnification for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, Purchaser shall first instruct the Escrow Agent to return to it Indemnity Shares allocable to such Seller in accordance with the first sentence of this Section 14.2(b). To the extent such return in Indemnity Shares does not - 26 - fully offset the Loss, such Seller shall satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the remainder of the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to such Seller. To the extent such Seller and its affiliate transferees no longer owns Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, such Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any Seller be required to return to Purchaser more than such Seller's Purchaser Shares (or the cash equivalent of such Purchaser Shares based on the IPO Price if such Seller no longer owns such Purchaser Shares). (d) The remedies provided in this Section 14.2 are the exclusive remedy of the Purchaser with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 14.2 shall prohibit Purchaser from seeking specific performance or injunctive relief against any Seller or the Partnership in respect of a breach by such Seller or the Partnership of any covenant hereunder; and further provided, that nothing in this Section 14.2 shall limit Purchaser's remedies for a breach of covenant occurring prior to the Closing. 14.3 Indemnification by Purchaser. (a) Purchaser shall indemnify and hold harmless each Seller and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Purchaser of any representation, warranty, or covenant made by Purchaser in this Agreement, in each case solely to the extent provided in Section 14.3(b). (b) Purchaser's sole obligation and each Seller's sole remedy for a breach by Purchaser of a representation, warranty, or covenant hereunder shall be for Purchaser to pay such Seller the amount of such Seller's Loss in cash; provided that Purchaser's total obligations under this Section 14.3 shall in no event exceed the aggregate value of the Interests and the General Partner Shares; provided, however, that nothing in this Section 14.3(b) shall prohibit such Seller from seeking specific performance or injunctive relief against Purchaser in respect of a breach by Purchaser of any covenant hereunder; and further provided, that nothing in this Section 14.3(b) shall limit such Seller's remedies for a breach of covenant occurring prior to the Closing. ARTICLE 15 Miscellaneous 15.1 Limited Partners. The Parties acknowledge and agree that the LP Sellers are acting in all matters with respect to the Partnership hereunder as limited partners. 15.2 Expenses. Except as set forth in Section 15.3, each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including fees of brokers, finders, advisers, attorneys, and accountants; provided that Purchaser shall pay the fees of U.S., Cayman Islands and Marshall Islands counsel to OCM Ajax Investments, Inc. - 27 - 15.3 HSR Expenses. The Partnerships shall bear all expenses pro rata relating to filings in compliance with the HSR Act to be made in respect of the transactions contemplated hereunder; provided that Purchaser shall bear all such expenses if Purchaser completes the IPO (as defined in the Plan of Recapitalization). 15.4 Entirety of Agreement. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all representations, warranties, covenants, and agreements which have induced this Agreement. 15.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) If to Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to an LP Seller, to such LP Seller and its legal representative using the contact information set forth below such LP Seller's signature on the signature pages hereto. (c) If to Georgiopoulos or MGP Stockholder: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 15.6 No Exclusion of Vessels. If this Agreement relates to a Partnership that owns more than one Vessel, Purchaser shall have no right hereunder to close as to one or more such Vessels and exclude one or more other Vessels from the Partnership in connection with the transactions contemplated hereunder without amendment to the Agreement pursuant to Section 15.7. In addition, this Agreement may not be terminated except in accordance with Section 13.1. - 28 - 15.7 Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by Purchaser, the Partnership, a Majority in Interest, and Georgiopoulos. 15.8 Waiver. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. 15.9 Assignment; Binding Nature; No Beneficiaries. This Agreement may not be assigned by any Party without the prior written consent of Purchaser, a Majority in Interest, and Georgiopoulos; provided, however, that Purchaser may assign its rights hereunder to any direct or indirect wholly-owned subsidiary of Purchaser which assumes the obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations, and further provided, that consideration provided for by Article 2 shall in any event be issued in shares of the original Purchaser hereunder which shall be the entity that sells shares to the underwriters pursuant to the Underwriting Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 15.10 Severability. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 15.11 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15.12 Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. 15.13 Negotiated Agreement. Purchaser and the Sellers acknowledge that they have been advised to seek advice of their own counsel, the language chosen by the Parties hereto expresses their mutual intent, and they accordingly agree that if an ambiguity exists with respect - 29 - to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. 15.14 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 15.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 15.16 Execution and Delivery. This Agreement may be executed in two or more 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. 15.17 Consent and Waiver to Certain Assignments of Partnership Interests. If the Partnership is named on Schedule 3, each LP Seller and each General Partner hereby (i) consents to the assignments of partnership interests contemplated by the assignments of partnership interests under any of the agreements listed in Schedule 3 (the "Assignments") and (ii) waives all its rights and interests under Section 9.01 of the limited partnership agreements of the Partnerships with respect to such assignments of partnership interests. [The remainder of this page has intentionally been left blank.] - 30 - IN WITNESS WHEREOF, all of the Parties hereto have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer HARRIET, L.P. By GENMAR Harriet Corporation, its Managing General Partner By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: [SIGNATURES OF LIMITED PARTNERS] PETER C. GEORGIOPOULOS in his individual capacity Witness: /s/ Peter C. Georgiopoulos /s/ Lambrini Hilias - ---------------------------------- --------------------------------------- Printed Name: Lambrini Hilias - 31 - GENERAL MARITIME III CORPORATION By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GENMAR HARRIET CORPORATION in its capacity as Managing General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GMC ADMINISTRATION LTD. in its capacity as Administrative General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: - 32 - LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A -- Lockup Agreement Exhibit B -- Registration Rights Agreement Exhibit C -- Waiver and Contribution Agreement Exhibit D -- Closing Opinion DISCLOSURE SCHEDULE: Schedule 4.3(a) -- Capitalization; Title Schedule 4.3(b) -- Capitalization; Title (cont'd) Schedule 4.6(b) -- Financial Statements; Undisclosed Liabilities Schedule 4.8(a) -- Taxes Schedule 4.8(b) -- Taxes (cont'd) Schedule 4.8(c) -- Taxes (cont'd) Schedule 4.9(b) -- Title to Properties; Absence of Encumbrances Schedule 4.10 -- Contracts Schedule 4.12 -- Litigation Schedule 4.13(a) -- Environmental Matters Schedule 4.13(b) -- Environmental Matters (cont'd) Schedule 4.13(c) -- Environmental Matters (cont'd) SCHEDULES: Schedule 1 -- SPVs Schedule 2 -- Vessels Schedule 3 -- Certain Assignments of Partnership Interests - --------------- * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.8 10 a2050304zex-2_8.txt EXHIBIT 2.8 Exhibit 2.8 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD. PACIFIC TANKSHIP, L.P. THE LIMITED PARTNERS OF PACIFIC TANKSHIP, L.P. GENMAR PACIFIC LTD. as the sole stockholder of GENMAR PACIFIC CORPORATION PETER C. GEORGIOPOULOS as the sole stockholder of GMC ADMINISTRATION LTD. GENMAR PACIFIC CORPORATION as Managing General Partner of PACIFIC TANKSHIP, L.P. and GMC ADMINISTRATION LTD. as Administrative General Partner of PACIFIC TANKSHIP, L.P. Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), Pacific Tankship, L.P., a Cayman Islands limited partnership (the "Partnership") by its Managing General Partner, the parties listed under the heading "LP Sellers" on the signature pages hereto (the "LP Sellers"), Peter C. Georgiopoulos, an individual with a business address of 35 West 56th Street New York, NY 10019 ("Georgiopoulos"), Genmar Pacific Ltd., a New York corporation ("MGP Stockholder") and together with Georgiopoulos and the LP Sellers, the "Sellers"), Genmar Pacific Corporation, a Marshall Islands corporation, in its capacity as Managing General Partner of the Partnership (the "Managing General Partner"), and GMC Administration Ltd., a Cayman Islands exempted company, in its capacity as Administrative General Partner of the Partnership (the "Administrative General Partner" and, together with the Managing General Partner, the "General Partners"). Purchaser, the Sellers, and the General Partners are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The LP Sellers are all of the limited partners of the Partnership and owners of all of the Interests (as hereinafter defined). B. Georgiopoulos owns, directly, all shares of the issued share capital (the "AGP Shares") of the Administrative General Partner and all shares of the outstanding capital stock of MGP Stockholder. C. MGP Stockholder owns, directly, all shares of the outstanding capital stock (the "MGP Shares", and together with the AGP Shares, the "General Partner Shares") of the Managing General Partner. D. The Partnership owns all of the issued and outstanding share capital of each entity listed in Schedule 1, (each an "SPV" and, together with the Partnership, the "Company") each of which owns a Vessel (as hereinafter defined). E. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, as further described in the Plan of Recapitalization. F. As part of the Recapitalization, Purchaser desires to exchange shares ("Purchaser Shares") of the common stock of Purchaser, par value $.01 per share (the "Purchaser Stock") for all of the Interests and General Partner Shares on the terms and conditions set forth herein and therein (the "Exchange"). G. The Parties intend that the Exchange will be treated either as an "exchange" pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code") or as part of a "reorganization" within the meaning of Section 368(a) of the Code. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 Definitions 1.1 "AGP Shares" shall have the meaning set forth in Recital B. 1.2 "Balance Sheet" means the adjusted unaudited consolidated balance sheet of the Company as of March 31, 2001 previously delivered to Purchaser. 1.3 "Closing" means the closing of the transactions contemplated hereby. 1.4 "Closing Date" means the date on which the Closing occurs. 1.5 "Closing Opinion" has the meaning set forth in Section 3.9. 1.6 "Company" has the meaning set forth in Recital D. 1.7 "Contracts" has the meaning set forth in Section 4.10. 1.8 "Deed of Assignment and Adherence" means the Deed of Assignment and Adherence to be executed by each LP Seller, the Purchaser, the Administrative General Partner, and the Managing General Partner in substantially the form of Exhibit F. 1.9 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Sellers have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or the violation or alleged violation of any Environmental Law. 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. - 2 - 1.13 "Escrow Agent" has the meaning assigned to such term in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Purchaser, the Sellers, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may reasonably be required by the Escrow Agent. 1.15 "Financial Statements" means the audited consolidated balance sheet and statements of earnings, partners' equity and cash flows of the Company as of, and for each of the fiscal years ended December 31, 2000, 1999, and 1998. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "General Partnership Shares" has the meaning set forth in Recital C. 1.18 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.20 "Indemnity Shares" means the Purchaser Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.21 "Interests" mean the limited partnership interests in the Partnership held by Limited Partners. 1.22 "Interim Financial Statements" means the unaudited consolidated financial statements of the Company as of, and for the period ended March 31, , 2001 previously delivered to Purchaser. 1.23 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.24 "Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.25 "Licenses" has the meaning set forth in Section 4.14(b). 1.26 "Limited Partner" means a limited partner of the Partnership. 1.27 "Lockup Agreement" means the Lockup Agreement executed by the Sellers regarding the Purchaser Shares in the form of Exhibit A. - 3 - 1.28 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.29 "Majority in Interest" means LP Sellers holding a majority of the Interests. 1.30 "MGP Shares" has the meaning set forth in Recital C. 1.31 "MGP Stockholder" has the meaning set forth in the preamble. 1.32 "Material Adverse Effect" means any material adverse effect on the Company's business, operations, assets, financial condition, liabilities, or results of operations or on the ability of any Seller to perform its obligations hereunder. 1.33 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.34 "Partner" means a General Partner or a Limited Partner. 1.35 "Partnership Agreement" means the Limited Partnership Agreement of the Partnership dated as of October 27, 1997, as amended to date. 1.36 "Partnerships" means Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. 1.37 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. 1.38 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.39 "Purchaser Share" has the meaning set forth in Recital F. 1.40 "Purchaser Stock" has the meaning set forth in Recital F. 1.41 "Registration Rights Agreement" means the Registration Rights Agreement by and among the Sellers, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit B. - 4 - 1.42 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.43 "SPV" has the meaning set forth in Recital D. 1.44 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.45 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser, Lehman Brothers Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.46 "Vessel" means a motor tanker described in Schedule 2. 1.47 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Seller, substantially in the form of Exhibit C. 1.48 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Articles, Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Articles, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. ARTICLE 2 Exchange of Securities 2.1 Generally. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, (a) each LP Seller with full title guarantee shall sell, assign, transfer and deliver absolutely by the execution and delivery of the Deed of Assignment and Adherence to Purchaser, and Purchaser shall purchase and accept from each LP Seller, all of such LP Seller's Interests and all of such LP Seller's rights, title, and interest in the Interests free and - 5 - clear of all Encumbrances, (b) Georgiopoulos with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from Georgiopoulos all of the AGP Shares and all of Georgiopoulos' rights, title, and interest in the AGP Shares free and clear of all Encumbrances, and (c) MGP Stockholder with full title guarantee shall sell, assign, transfer and deliver absolutely to Purchaser, and Purchaser shall purchase and accept from MGP Stockholder all of the MGP Shares and all of MGP Stockholder's rights, title, and interest in the MGP Shares free and clear of all Encumbrances in each case in exchange for the number of Purchaser Shares specified pursuant to Section 2.2. The obligations of the Sellers in this Section 2.1 are several, not joint. 2.2 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to each Seller in consideration of the sale, assignment, transfer, and delivery of all Interests and General Partner Shares to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference and made a part hereof. Purchaser shall deposit 10% of the Purchaser Shares to which the Sellers are entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Purchaser shall deposit an additional 10% of the total number of Purchaser Shares to which each Seller is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against a Seller under Section 14.2 within six months after the Closing, Purchaser shall instruct the Escrow Agent to release such Indemnity Shares to the Sellers entitled to them in accordance with the Plan of Recapitalization. Purchaser shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the relevant Seller to the extent Purchaser and such Seller or a court of competent jurisdiction finally resolves such claim in favor of such Seller without the possibility of appeal. Purchaser shall deposit an additional number of Purchaser Shares equal to the number of Collar Shares specified in Section 9(C)(vi)(a) of the Plan of Recapitalization in escrow in the Collar Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Purchaser Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. 2.3 Substituted Partner. Each LP Seller in its capacity as a Limited Partner of the Partnership hereby (a) confirms and acknowledges its intention that the Purchaser or its assignees be admitted to the Partnership as a substituted Limited Partner of the Partnership, (b) gives its consent to the sale and transfer of the Interests to Purchaser and such admission, and (c) waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred hereunder. Each LP Seller acknowledges and agrees that it will cease to be a partner of the Partnership as of the Closing. The Purchaser and its assignees agree that so long as any of them is a partner of the Partnership, such partner shall be bound by all of the terms and provisions of the Partnership Agreement as it shall be amended from time to time to the same extent and in the same manner as if the Purchaser or its assignees had been an original party to the Partnership Agreement in place of each LP Seller. 2.4 Administrative General Partner Consents. The Administrative General Partner, in its capacity as such, hereby (a) gives its consent to the sale and transfer of the Interests to Purchaser and to Purchaser's admission as a substituted limited partner of the Partnership, (b) - 6 - waives any right of first refusal it may have under the Partnership Agreement or otherwise to acquire any of the Interests being sold and transferred under this Agreement, (c) waives any requirement under the Partnership Agreement that an opinion of counsel be delivered in connection with the sale and transfer of the Interests under this Agreement, and (d) other than execution of the Deed of Assignment and Adherence, agrees that no representations or other instruments of assignment are required by the Administrative General Partner for the sale and transfer of the Interests to Purchaser and Purchaser's admission as a limited partner of the Partnership other than as set forth in this Agreement, including the Exhibits hereto. 2.5 Fees and Expenses. Purchaser shall pay all reasonable legal fees and other expenses incurred by the Partnership in connection with Purchaser's substitution as a limited partner. ARTICLE 3 Closing The Closing shall be held at the Recapitalization Closing Time (as defined in the Plan of Recapitalization) at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022. The following shall take place at the Closing: 3.1 Transfer of Interests and Admission of Purchaser as Limited Partner. The transfer of all Interests to Purchaser and the admission of Purchaser as a Limited Partner shall be reflected in the Register of Partnership Interests on the books and records of the Partnership. 3.2 Delivery of Stock and Share Certificates. Georgiopoulos shall deliver or cause to be delivered to Purchaser share certificates representing all the equity interests of the Administrative General Partner (including all issued and outstanding AGP Shares), and MGP Stockholder shall deliver or cause to be delivered to Purchaser stock certificates representing all the equity interests of the Managing General Partner (including all issued and outstanding MGP Shares) accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer. 3.3 Delivery of Purchaser Shares. Purchaser shall deliver to the Escrow Agent certificates representing all of the Purchaser Shares to be issued hereunder. 3.4 Delivery of Schedule of Purchaser Shares. Purchaser shall deliver to the Partners a schedule reflecting issued and outstanding capital stock of Purchaser as of the Closing including the number of Purchaser Shares to be delivered to the Sellers and the number of Purchaser Shares delivered to the various escrow accounts for the benefit of each Seller as more particularly described in the Plan of Recapitalization. 3.5 Resignation of Directors and Officers of General Partners. The directors and officers of the General Partners shall resign as of the Closing, and Purchaser shall be entitled to designate their replacements. 3.6 Lockup Agreement. The Sellers shall execute and deliver to Purchaser the Lockup Agreement. - 7 - 3.7 Registration Rights Agreement. The Sellers and Purchaser shall execute and deliver the Registration Rights Agreement. 3.8 Legal Opinion. Marshall Islands counsel for the Purchaser shall deliver to the Sellers an opinion containing substantially the items set forth in Exhibit D in a form reasonably acceptable to counsel to the Liquidating Seller Stockholder (the "Closing Opinion"). 3.9 Deed of Assignment and Adherence. Each LP Seller and Purchaser shall execute and deliver the Deed of Assignment and Adherence. 3.10 Transfer Taxes. The Purchaser shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the Interests (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the Interests. ARTICLE 4 Representations and Warranties of the Partnership The Partnership hereby represents and warrants to Purchaser as follows: 4.1 Organization and Good Standing of Partnership. The Partnership is a partnership duly organized, validly existing, and in good standing under the laws of the Cayman Islands. The Partnership has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Partnership is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Copies of the certificate of registration of exempted limited partnership, each annual return and declaration of the Partnership since its formation, and the Partnership Agreement and all amendments thereto have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the Partners of the Partnership and all other records regarding the governance or ownership of the Partnership have been made available to Purchaser and are true, complete and accurate in all material respects. Other than the SPVs listed in Schedule 1, the Partnership has no subsidiaries and does not own any equity interest in any Person whatsoever. 4.2 Organization and Good Standing of SPVs. Each SPV is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not be reasonably likely to have a Material Adverse Effect. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Purchaser and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to Purchaser and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. - 8 - 4.3 Capitalization, Title. (a) The total issued and outstanding equity of the Partnership consists of the Interests plus the interests of the Managing General Partner and the Administrative General Partner as set forth in Section 4.3(a) of the Disclosure Schedule. The aggregate capital contribution amount set forth in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. (b) The authorized capital and number of outstanding shares of capital of each SPV (the "SPV Shares") are as set forth in Section 4.3(b) of the Disclosure Schedule. All SPV Shares are validly issued and outstanding, fully paid, and non-assessable. The Partnership owns, beneficially and of record, and has good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from the Partnership of any SPV shares. (c) Except as set forth in the Partnership Agreement, there are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any equity of the Company or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of the Company or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of the Company. Except as set forth in the Partnership Agreement, there are no outstanding agreements among partners or members, registration rights agreements, or rights of first refusal pertaining to the Company's equity interests. None of the outstanding equity securities of the Company has been issued in violation of any rights of any Person or in violation of any Law. 4.4 Authorization; Enforceability. The execution and delivery of this Agreement by the Partnership has been duly authorized by all necessary partnership action required on the part of the Partnership. This Agreement has been duly executed and delivered by the Managing General Partner on behalf of the Partnership and constitutes the legal, valid, and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 4.5 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the certificate of registration of exempted limited partnership of the Partnership or the Partnership Agreement, any resolutions of the Partners of the Partnership, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of the Partnership or any SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Partnership or any SPV under (x) any - 9 - note, mortgage, deed of trust, lease or other agreement or instrument to which the Partnership or any SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Partnership, any SPV, or their respective properties. 4.6 Financial Statements; Undisclosed Liabilities. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Purchaser) have been prepared from the books and records of the Company on a consistent basis (and, in the case of the Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the Company as at their respective dates and the results of operations (and, in the case of the Financial Statements, the cash flows) of the Company for the periods covered thereby. (b) As of the date of the Balance Sheet, other than those set forth in Section 4.6(b) of the Disclosure Schedule, the Company had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise and, in the case of any such liabilities, debts, or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of the Balance Sheet, the Company has conducted its businesses in the ordinary course consistent with past practice and has not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet (including the footnotes thereto) prepared in accordance with GAAP (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of the Balance Sheet, there has been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities or results of operations of the Company (other than general economic or industry conditions), and, to the actual knowledge of the General Partners and the Sellers, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. 4.7 Receivables and Payables. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.8 Taxes. (a) Except as set forth in Section 4.8(a) of the Disclosure Schedule, the Company has timely filed with the appropriate taxing authorities all material Returns required to be filed by it (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable as determined on the basis of Tax Law as in effect as of the date hereof, except for Taxes (i) which the Company believes in good faith are not due and payable because they are being diligently contested by appropriate - 10 - proceedings, (ii) for which the Company has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. (b) Except as set forth in Section 4.8(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to the Company for any Pre-Closing Period, and there are no pending or, to the Seller Parties' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of the Company. No extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. (c) The Company has made provision on the Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.8(c) (ii) of the Disclosure Schedule, the Company is not liable for Taxes of any other Person, and is neither currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by the Company with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Returns that the Company is or may be subject to taxation by that jurisdiction; and (iv) the Company has not filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person (except that the Partnership and the SPVs are treated as a single entity for U.S. federal income tax purposes). 4.9 Title to Properties; Absence of Encumbrances. (a) The Company does not own or lease any real property. (b) Except as set forth in Section 4.9(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in Schedule 2, and has either good title to or a valid leasehold, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on the Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by the Company is subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 Contracts. Each oral or written agreement to which the Partnership or any SPV is a party and which is material to the business of the Company as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by the Partnership or such SPV, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, the Partnership and each SPV are in compliance and are - 11 - not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which either of them is a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the actual knowledge of the General Partners and the Sellers, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the Disclosure Schedule, to the General Partner's knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified the Partnership or any SPV of any unresolved complaint regarding the performance of the Partnership or any SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, neither the Partnership nor any SPV has received any notice of any termination or non-renewal of any Contract and, to the actual knowledge of the General Partners and the Sellers, no other party to any Contract intends to terminate or not renew any such Contract. 4.11 Insurance. Each insurance policy currently maintained by the Partnership or an SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 Litigation. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the actual knowledge of the General Partners and the Sellers, threatened against the Partnership or any SPV or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Partnership nor any SPV is identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 4.13 Environmental Matters. Except as would not be reasonably likely to have a Material Adverse Effect: (a) except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the Company are in compliance with applicable Environmental Laws which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof and the Company has not received any written notice of any violation of any Environmental Law; (b) except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Seller Parties' knowledge, threatened against the - 12 - Partnership, any SPV, or any of their respective properties or assets, or any director, officer, or employee of the Company, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed; and (c) except as set forth on Section 4.13(c) of the Disclosure Schedule, to the actual knowledge of the General Partners and Sellers, there are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Partnership, any SPV, or any person or entity whose liability for any Environmental Claim that the Partnership or any SPV has retained or assumed. 4.14 Compliance with Law. (a) Except as would not be reasonably likely to have a Material Adverse Effect, the Company is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. The Company has not received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) the Company has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to the actual knowledge of the General Partners and the Sellers, threatened seeking the revocation or limitation of any such License. 4.15 Employees. The Company does not now have, nor has it since the date of its formation had, any employees. 4.16 Books and Records. The books and records of the Company with respect to the Company, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. ARTICLE 5 Representations and Warranties of each Seller Each Seller, severally and not jointly hereby represents and warrants to Purchaser as follows: 5.1 Authorization; Enforceability. If such Seller is an individual, he or she has full legal capacity to enter into and carry out his or her obligations under this Agreement. If such Seller is not an individual, such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and the execution and delivery of this Agreement by such Seller have been duly authorized by all necessary corporate or analogous action. This Agreement has been duly executed and delivered by such Seller and constitutes the - 13 - legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 5.2 No Conflicts. Neither the execution and delivery by such Seller of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate such Seller's certificate of incorporation, by-laws, or analogous constitutive or governing documents, or any resolutions of the board of directors of such Seller or person(s) exercising analogous powers, or (b) except as would not be reasonably likely to have a material adverse effect on such Seller's ability to consummate the transactions contemplated hereby, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of such Seller under (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which such Seller is a party or by which any of its properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over such Seller or its properties. 5.3 Investment Purpose; Private Placement. (a) Such Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. In addition, except (i) as otherwise previously disclosed to the Purchaser in writing before the date of this Agreement or (ii) with respect to the potential sale by the Sellers in the overallotment option in connection with Purchaser's initial public offering, the Sellers are not under a binding commitment or obligation to sell, transfer, or otherwise dispose of the Purchaser Shares to be acquired by such Sellers pursuant to this Agreement. Notwithstanding the foregoing, each Seller has, subject to the Lockup Agreement, the right at all times to sell or otherwise dispose of all or any part of the Purchaser Shares pursuant to a registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and the right to dispose of its Purchaser Shares is within his, her or its control. (b) Such Seller acknowledges that the issuance of the Purchaser Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Such Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (c) Such Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. - 14 - (d) Such Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (e) Such Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Such Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by such Seller have been made available to such Seller and the persons that such Seller has retained to advise it with respect to such an acquisition, and that such Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) Such Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax considerations of an investment in the Purchaser Shares. Such Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Purchaser Shares. Such Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Article 8 or on any representations of any officer, director, employee, founder or agent of Purchaser. ARTICLE 6 Representations and Warranties of each LP Seller Each LP Seller, severally and not jointly, hereby represents and warrants to Purchaser as follows: 6.1 Title. The aggregate capital contribution amount set forth opposite such LP Seller's name in Section 4.3(a) of the Disclosure Schedule is the true and correct amount of aggregate capital contributions made by such LP Seller to the Partnership. Such LP Seller has good, valid, and marketable title to and, subject to the terms of the Partnership Agreement, the right to transfer to Purchaser, all of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. At the Closing, such LP Seller will convey ownership of the Interests corresponding to such capital contributions, free and clear of any and all Encumbrances. Subject to the terms of the Partnership Agreement, no Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from such LP Seller of any Interests. ARTICLE 7 Representations and Warranties of Georgiopoulos Georgiopoulos hereby represents and warrants to Purchaser as follows: 7.1 Capitalization; Title. The authorized capital of the Administrative General Partner consists of 50,000 shares, par value $1.00 per share, of which 1,000 shares are outstanding. All AGP Shares are validly issued and outstanding, fully paid, and non-assessable. - 15 - The Administrative General Partner has good, valid, and marketable title to all of the Interests the Administrative General Partner owns, free and clear of any and all Encumbrances. Georgiopoulos owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the AGP Shares, free and clear of any and all Encumbrances. At the Closing, Georgiopoulos will convey ownership of the AGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Georgiopoulos of any AGP Shares. 7.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the memorandum of association or articles of association of the Administrative General Partner or any resolutions of the directors or members of the Administrative General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Administrative General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Administrative General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over the Administrative General Partner or its properties. 7.3 Financial Condition. The Administrative General Partner has conducted no business other than serving as administrative general partner of Ajax Limited Partnership, Ajax II, L.P., Boss, L.P., General Maritime I, L.P., General Maritime II, L.P., Harriet, L.P., and Pacific Tankship, L.P. and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as administrative general partner for the benefit of the Partnership in the Administrative General Partner's good faith judgment. ARTICLE 8 Representations and Warranties of MGP Stockholder MGP Stockholder hereby represents and warrants to Purchaser as follows: 8.1 Capitalization; Title. (a) The authorized capital of the Managing General Partner consists of 500 shares of stock, without par value, of which 100 shares are outstanding. All MGP Shares are validly issued and outstanding, fully paid, and non-assessable. The Managing General Partner has good, valid, and marketable title to all of the Interests the Managing General Partner owns, free and clear of any and all Encumbrances. MGP Stockholder owns, beneficially and of record, and has good, valid, and marketable title to and the right to transfer to Purchaser, all of the MGP Shares, free and clear of any and all Encumbrances. At the Closing, MGP Stockholder will convey ownership of the MGP Shares, free and clear of any and all Encumbrances. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) - 16 - that is an agreement, arrangement, understanding, or option for the purchase or acquisition from MGP Stockholder of any MGP Shares. 8.2 No Conflicts. Neither the execution and delivery by the Partnership of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the articles of incorporation or by-laws of the Managing General Partner or any resolutions of the directors or members of the Managing General Partner, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body (other than pursuant to the HSR Act), or create an Encumbrance on any of the properties or assets of the Managing General Partner under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which the Managing General Partner is a party or by which any of its assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over Managing General Partner or its properties. 8.3 Financial Condition. The Managing General Partner has conducted no business other than serving as managing general partner of the Partnership and has no indebtedness for borrowed money or material liabilities, debts, or obligations of the type required to be reported on a balance sheet in accordance with GAAP (whether absolute, accrued, contingent or otherwise) other than in connection with its service as managing general partner for the benefit of the Partnership in the Managing General Partner's good faith judgment. ARTICLE 9 Representations and Warranties of Purchaser Purchaser represents and warrants to the Sellers as follows: 9.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 9.2 Capitalization. The authorized capital of the Purchaser consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following the Closing the outstanding capital stock of the Purchaser shall be as set forth in the schedule delivered pursuant to Section 3.4. 9.3 Authorization. The execution and delivery of this Agreement by Purchaser have been duly authorized by all necessary corporate action required on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 9.4 No Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict - 17 - with or violate the Certificate of Incorporation or By-Laws of Purchaser, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Purchaser (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Purchaser to consummate the transactions contemplated hereby). 9.5 Litigation. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Purchaser, threatened against Purchaser or any of its properties or assets, or any director, officer or employee of Purchaser in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 9.6 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 9.7 Private Placement Purchaser is acquiring the Interests and the GP Shares solely for the purpose of ownership (directly or indirectly) of the Partnership as a whole for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Purchaser acknowledges that the Interests and the GP Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Purchaser acknowledges that the Interests and the GP Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. 9.8 Contribution Agreements. Each Contribution Agreement that Purchaser is entering into pursuant to the Plan of Recapitalization with partners of the Exchanging Partnerships (as defined in the Plan of Recapitalization) is substantially similar to this Agreement and contains substantially the same economic and legal terms. ARTICLE 10 Covenants The Parties hereby covenant and agree as follows: 10.1 Conduct of Business. From the date hereof until the Closing, each of the Company and the General Partners will conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Purchaser: - 18 - (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.3(b) with respect to, any Interests or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any Seller or general partner of the Partnership; (e) redeem, purchase or otherwise acquire, directly or indirectly, any Interest; or (f) enter into any commitment to do any of the foregoing. 10.2 No Solicitation of Alternative Transaction. For a period of one hundred and eighty (180) days following the date hereof, the Sellers shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Partnership, any general partner of the Partnership, any SPV, or their assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Partnership or any SPV (collectively, "Acquisition Proposals"). The Sellers shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. Notwithstanding the foregoing, any Seller who is in material breach of any representation warranty, covenant, or agreement hereunder shall be bound by this Section 10.2 regardless of the expiration of such one hundred eighty (180) day period. 10.3 Taxes and Cooperation on Tax Matters. (a) Tax Returns; Liability for Taxes. (1) At the Managing General Partner's election, the Managing General Partner shall be responsible for and shall have the ultimate discretion with respect to, all Returns required or permitted by applicable law to be filed by the Managing General Partner with respect to the Company for all taxable periods that end on or before the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Purchaser (which approval shall not be unreasonably withheld). If the Managing General Partner does not elect to prepare and file such Returns, the Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, such Returns; provided, however, that the preparation and filing of such Returns shall be - 19 - subject to review and approval of the Managing General Partner (which approval shall no be unreasonably withheld). (2) The Purchaser shall be responsible for, and shall have the ultimate discretion with respect to, all Returns required to be filed by the Company for all taxable periods that begin before and end after the Closing Date; provided, however, that the preparation and filing of such Returns shall be subject to review and approval of the Managing General Partner (which approval shall not be unreasonably withheld). (3) The Purchaser shall be responsible for, and shall have ultimate discretion with respect to, all Returns required to be filed by the Company for taxable periods that begin on or after the Closing Date. (4) All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of Returns of the Company (whether filed and prepared by the Managing General Partner or the Purchaser) shall be the responsibility of the Company. (5) Purchaser shall be liable and shall indemnify the Sellers for any and all Taxes imposed on the Company (but not the Sellers) for which the Sellers are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 10.3(a)(5) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any tax benefit (e.g., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). (6) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Purchaser, the Company, or the Sellers under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the Interests. (7) The Sellers shall notify Purchaser in writing of, and keep Purchaser fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Purchaser has indemnified the Sellers pursuant to this Section 9.03(a). Purchaser may control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Sellers informed on a current basis of the status of any such proceedings and (b) the Sellers and their counsel have the right to participate, at the Sellers' expense, in any such proceeding. The Sellers shall not settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Purchaser, which consent may not be unreasonably withheld. (b) New Elections. No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Company which may have an effect on the Company for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Purchaser. (c) Cooperation. - 20 - (1) Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 10.3 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Sellers (before the Closing) and Purchaser (after the Closing) shall each cause the Company (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company or the Sellers, as the case may be, shall allow the other party to take possession of such books and records. (2) Purchaser and the Sellers further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Purchaser or the Sellers. 10.4 Execution of Documents. Each Seller shall execute and deliver to Purchaser the Registration Rights Agreement and the Lockup Agreement. The Purchaser shall execute and deliver to each Seller the Registration Rights Agreement. 10.5 HSR Act. The Sellers and Purchaser shall make all filings, cooperate fully with respect to all filings required by Sellers and Purchaser, and shall take any other actions required under the HSR Act with respect to the transactions contemplated hereunder. 10.6 Further Assurances. The Partnership and the Sellers agree to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Purchaser agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as the Partnership and the Sellers may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof 10.7 Restrictions on Securities Each Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend and that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE - 21 - "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." 10.8 Continuance of Business of the Partnerships. The Purchaser shall continue the historic business of the Partnerships or use a significant portion of the Partnerships' historic business assets in a business. 10.9 Overallotment Sales. If the LP Sellers have the opportunity to sell Purchaser Shares in the underwriters' overallotment option in the Purchaser's initial public offering, then at the closing of the issuance of any Purchaser Shares pursuant to such overallotment option, Purchaser shall make substantially similar representations and warranties to such selling LP Sellers as Purchaser makes to the underwriters and obtain for such selling LP Sellers an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling LP Sellers' use in their diligence review for sale under such overallotment option; provided, however, that such selling LP Sellers shall provide any information or materials reasonably requested by such accountants and counsel. 10.10 Failure to Close Initial Public Offering. After the Closing Date, in the event that the sale of Purchaser's Common Stock pursuant to the Underwriting Agreement does not close, (a) Peter Georgiopoulos will be the Chief Executive Officer of Purchaser pursuant to a previously negotiated employment agreement, (b) Purchaser will promptly call a meeting of stockholders for the purpose of electing a board of directors, and (c) the Sellers will negotiate in good faith to create appropriate corporate governance and stockholder arrangements that (x) will include tag-along rights and drag-along rights, (y) may include rights of first refusal, preemptive rights, and registration rights, and (z) will include limitations on affiliate transactions, in each case, the terms of which will be negotiated among the parties. ARTICLE 11 Conditions Precedent to Obligations of Purchaser The obligations of Purchaser under Article 2 and Article 3 and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 11.1 Representations and Warranties. Each and every representation and warranty of the Sellers and the Partnership contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. - 22 - 11.2 Compliance with Covenants. The Sellers and the Company shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. 11.3 Lack of Adverse Change. Since the date of the Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 11.4 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 11.5 Consents of Third Parties. All material consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 11.6 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 11.7 Lockup Agreement. The Sellers shall have executed and delivered to Purchaser the Lockup Agreement. 11.8 Registration Rights Agreement. The Sellers shall have executed and delivered to Purchaser the Registration Rights Agreement. 11.9 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 11.10 Waiver and Contribution Agreement. Each Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. 11.11 Deed of Assignment and Adherence. Each LP Seller shall have executed and delivered to Purchaser the Deed of Assignment and Adherence. - 23 - 11.12 Escrow Agreement. Each Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement. 11.13 Customary Closing Documents. Purchaser shall have received such other customary closing documents as Purchaser or its counsel may reasonably request (other than legal opinions). ARTICLE 12 Conditions Precedent to Obligations of the Sellers The obligations of the Sellers under Article 2 and Article 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Sellers: 12.1 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 12.2 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 12.3 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, including expiration of any applicable waiting period or approval under the HSR Act, shall have been obtained. 12.4 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement by the Sellers and the consummation of the transactions contemplated hereby shall have been obtained in writing. 12.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of the Sellers, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to the Sellers. - 24 - 12.6 Registration Rights Agreement. Purchaser shall have executed and delivered to the Sellers the Registration Rights Agreement. 12.7 Underwriting Agreement. Purchaser, ABN AMRO Rothschild, LLC, Lehman Brothers Inc., and Jefferies & Company, Inc. shall have entered into the Underwriting Agreement. 12.8 Deed of Assignment and Adherence. Purchaser shall have executed and delivered to each LP Seller the Deed of Assignment and Adherence. 12.9 Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement. 12.10 Closing Opinion. The Sellers shall have received the Closing Opinion. 12.11 Management Rights Agreement. Purchaser and the Liquidating Seller Stockholder shall have entered into the Management Rights Agreement. 12.12 Customary Closing Documents. Sellers shall have received such other customary closing documents as Sellers or their counsel may reasonably request (other than legal opinions in addition to the Closing Opinion). ARTICLE 13 Termination of Agreement 13.1 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and a Majority in Interest; (b) by Purchaser or a Majority in Interest, if the Closing shall not have been consummated by 180 days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party or Parties seeking to terminate this Agreement; or (c) by Purchaser on the one hand, or a Majority in Interest or Georgiopoulos on the other hand, if any Seller or Purchaser, respectively, fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 13.1(c) if it is also in material breach of any provision of this Agreement. 13.2 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and the Sellers shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Article 14 and Article 15 shall survive any termination of this Agreement. - 25 - ARTICLE 14 Remedies 14.1 Survival. The representations and warranties of each Seller in Sections 5.1, 6.1, 7.1, and Section 8.1 and Purchaser in Sections 9.1 through 9.3 shall survive the Closing for a period of eighteen months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period alleging breach thereof, such additional amount of time required for the final resolution of any claim under Section 14.2. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus, with respect to any such representation or warranty of which notice is given in writing during such initial six-month period alleging breach hereof, such additional amount of time required for the final resolution of any claim under Section 14.2. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely, except that the covenant set forth in Section 10.8 shall survive for only one year. 14.2 Indemnification by Sellers. (a) Each Seller shall, severally and not jointly, indemnify and hold harmless Purchaser, the Company, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with (i) a breach by such Seller of any representation, warranty, or covenant made by such Seller in this Agreement or (ii) a breach by the Partnership of any representation, warranty, or covenant made by the Partnership in this Agreement in favor of Purchaser, in each case solely to the extent provided in Section 14.2(b) but subject to the exceptions in Section 14.2(d). (b) Except for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(i) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares allocable to such Seller equal to the amount of the applicable Loss divided by the IPO Price until the number of Indemnity Shares allocable to such Seller equals zero. Each Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by such Seller for a breach of a representation, warranty or covenant under Section 14.2(a)(ii) shall be for Purchaser to instruct the Escrow Agent to return to Purchaser a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price (in accordance with Section 9(D) of the Plan of Recapitalization) until the total number of Indemnity Shares equals zero. If any Indemnity Shares remain after the return thereof pursuant to the preceding sentences, such Indemnity Shares shall be re-allocated among the Sellers in accordance with the Plan of Recapitalization. Any fractional shares among such Indemnity Shares subject to release from escrow under this Section 14.2(b) shall be subject to Section 7 of the Plan of Recapitalization. (c) With respect to indemnification for a breach by a Seller of any representation or warranty contained in Section 5.1, 6.1, 7.1 or 8.1, Purchaser shall first instruct the Escrow Agent to return to it Indemnity Shares allocable to such Seller in accordance with the first sentence of this Section 14.2(b). To the extent such return in Indemnity Shares does not - 26 - fully offset the Loss, such Seller shall satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the remainder of the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to such Seller. To the extent such Seller and its affiliate transferees no longer owns Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, such Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any Seller be required to return to Purchaser more than such Seller's Purchaser Shares (or the cash equivalent of such Purchaser Shares based on the IPO Price if such Seller no longer owns such Purchaser Shares). (d) The remedies provided in this Section 14.2 are the exclusive remedy of the Purchaser with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 14.2 shall prohibit Purchaser from seeking specific performance or injunctive relief against any Seller or the Partnership in respect of a breach by such Seller or the Partnership of any covenant hereunder; and further provided, that nothing in this Section 14.2 shall limit Purchaser's remedies for a breach of covenant occurring prior to the Closing. 14.3 Indemnification by Purchaser. (a) Purchaser shall indemnify and hold harmless each Seller and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Purchaser of any representation, warranty, or covenant made by Purchaser in this Agreement, in each case solely to the extent provided in Section 14.3(b). (b) Purchaser's sole obligation and each Seller's sole remedy for a breach by Purchaser of a representation, warranty, or covenant hereunder shall be for Purchaser to pay such Seller the amount of such Seller's Loss in cash; provided that Purchaser's total obligations under this Section 14.3 shall in no event exceed the aggregate value of the Interests and the General Partner Shares; provided, however, that nothing in this Section 14.3(b) shall prohibit such Seller from seeking specific performance or injunctive relief against Purchaser in respect of a breach by Purchaser of any covenant hereunder; and further provided, that nothing in this Section 14.3(b) shall limit such Seller's remedies for a breach of covenant occurring prior to the Closing. ARTICLE 15 Miscellaneous 15.1 Limited Partners. The Parties acknowledge and agree that the LP Sellers are acting in all matters with respect to the Partnership hereunder as limited partners. 15.2 Expenses. Except as set forth in Section 15.3, each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including fees of brokers, finders, advisers, attorneys, and accountants; provided that Purchaser shall pay the fees of U.S., Cayman Islands and Marshall Islands counsel to OCM Ajax Investments, Inc. - 27 - 15.3 HSR Expenses. The Partnerships shall bear all expenses pro rata relating to filings in compliance with the HSR Act to be made in respect of the transactions contemplated hereunder; provided that Purchaser shall bear all such expenses if Purchaser completes the IPO (as defined in the Plan of Recapitalization). 15.4 Entirety of Agreement. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all representations, warranties, covenants, and agreements which have induced this Agreement. 15.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) If to Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to an LP Seller, to such LP Seller and its legal representative using the contact information set forth below such LP Seller's signature on the signature pages hereto. (c) If to Georgiopoulos or MGP Stockholder: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 15.6 No Exclusion of Vessels. If this Agreement relates to a Partnership that owns more than one Vessel, Purchaser shall have no right hereunder to close as to one or more such Vessels and exclude one or more other Vessels from the Partnership in connection with the transactions contemplated hereunder without amendment to the Agreement pursuant to Section 15.7. In addition, this Agreement may not be terminated except in accordance with Section 13.1. - 28 - 15.7 Amendment. This Agreement may be modified or amended only by an instrument in writing, duly executed by Purchaser, the Partnership, a Majority in Interest, and Georgiopoulos. 15.8 Waiver. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. 15.9 Assignment; Binding Nature; No Beneficiaries. This Agreement may not be assigned by any Party without the prior written consent of Purchaser, a Majority in Interest, and Georgiopoulos; provided, however, that Purchaser may assign its rights hereunder to any direct or indirect wholly-owned subsidiary of Purchaser which assumes the obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations, and further provided, that consideration provided for by Article 2 shall in any event be issued in shares of the original Purchaser hereunder which shall be the entity that sells shares to the underwriters pursuant to the Underwriting Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 15.10 Severability. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 15.11 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15.12 Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. 15.13 Negotiated Agreement. Purchaser and the Sellers acknowledge that they have been advised to seek advice of their own counsel, the language chosen by the Parties hereto expresses their mutual intent, and they accordingly agree that if an ambiguity exists with respect - 29 - to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. 15.14 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 15.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 15.16 Execution and Delivery. This Agreement may be executed in two or more 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. 15.17 Consent and Waiver to Certain Assignments of Partnership Interests. If the Partnership is named on Schedule 3, each LP Seller and each General Partner hereby (i) consents to the assignments of partnership interests contemplated by the assignments of partnership interests under any of the agreements listed in Schedule 3 (the "Assignments") and (ii) waives all its rights and interests under Section 9.01 of the limited partnership agreements of the Partnerships with respect to such assignments of partnership interests. [The remainder of this page has intentionally been left blank.] - 30 - IN WITNESS WHEREOF, all of the Parties hereto have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer PACIFIC TANKSHIP, L.P. By GENMAR Pacific Corporation, its Managing General Partner By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: [SIGNATURES OF LIMITED PARTNERS] PETER C. GEORGIOPOULOS in his individual capacity Witness: /s/ Peter C. Georgiopoulos /s/ Lambrini Hilias - ----------------------------------- -------------------------------------- Printed Name: Lambrini Hilias - 31 - GENMAR PACIFIC LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GENMAR PACIFIC CORPORATION in its capacity as Managing General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: GMC ADMINISTRATION LTD. in its capacity as Administrative General Partner of the Partnership By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: - 32 - LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A -- Lockup Agreement Exhibit B -- Registration Rights Agreement Exhibit C -- Waiver and Contribution Agreement Exhibit D -- Closing Opinion DISCLOSURE SCHEDULE: Schedule 4.3(a) -- Capitalization; Title Schedule 4.3(b) -- Capitalization; Title (cont'd) Schedule 4.6(b) -- Financial Statements; Undisclosed Liabilities Schedule 4.8(a) -- Taxes Schedule 4.8(b) -- Taxes (cont'd) Schedule 4.8(c) -- Taxes (cont'd) Schedule 4.9(b) -- Title to Properties; Absence of Encumbrances Schedule 4.10 -- Contracts Schedule 4.12 -- Litigation Schedule 4.13(a) -- Environmental Matters Schedule 4.13(b) -- Environmental Matters (cont'd) Schedule 4.13(c) -- Environmental Matters (cont'd) SCHEDULES: Schedule 1 -- SPVs Schedule 2 -- Vessels Schedule 3 -- Certain Assignments of Partnership Interests - --------------- * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.9 11 a2050304zex-2_9.txt EXHIBIT 2.9 Exhibit 2.9 CONTRIBUTION AGREEMENT by and among GENERAL MARITIME SHIP HOLDINGS LTD., GENMAR ALEXANDRA, LLC, GENMAR II, LLC, EQUILI COMPANY, L.P., EQUILI COMPANY, LLC, EQUILI COMPANY II, L.P., AND EQUILI COMPANY II, LLC Dated as of May 25, 2001 CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT (this "Agreement"), is made as a Deed, is dated as of May 25, 2001 and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Acquiror"), Genmar Alexandra, LLC, a Delaware limited liability company, Genmar II, LLC, a Delaware limited liability company, Equili Company, L.P., a New York limited partnership, Equili Company, LLC, a Delaware limited liability company, Equili Company II, L.P., a New York limited partnership, and Equili Company II, LLC, a Delaware limited liability company (each a "Transferor"), and the partners or members, as the case may be, of each Transferor (each a "Partner" and together with the Transferors, the "Transferor Parties"). Acquiror and the Transferor Parties are sometimes individually referred to herein as a "Party" and together as the "Parties." RECITALS A. The Transferors listed on SCHEDULE 1 own all of the issued and outstanding share capital (the "SPV Shares") of the companies listed below each Transferor's name in SCHEDULE 1, each of which companies owns a Vessel (as hereinafter defined) except for two Transferors which each own a Vessel. As of the date hereof, the KENTUCKY and the WEST VIRGINIA Vessels are owned directly by Equili Company, L.P. and Equili Company II, L.P. respectively, which have leased such Vessels to Kentucky Shipping Company Ltd. and West Virginia Maritime Company Ltd., respectively, pursuant to bareboat charters as described on SCHEDULE 1. It is contemplated that the ownership of each of the KENTUCKY and WEST VIRGINIA Vessels will be transferred prior to the Closing Date (as hereinafter defined) to newly created Maltese entities. For purposes of this Agreement and subject to the provisions of Section 7.07, the companies which own the Vessels, together with Kentucky Shipping Company Ltd. and West Virginia Maritime Company Ltd., are defined as the "SPVs". B. Acquiror contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as ANNEX A (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, including the Vessels, as further described in the Plan of Recapitalization. C. As part of the plan of Recapitalization, Acquiror desires to exchange shares ("Acquiror Shares") of the common stock of Acquiror, par value $.01 per share (the "Acquiror Stock"), for all of the SPV Shares on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows: 1. DEFINITIONS. 1.01 "Action" has the meaning set forth in Section 7.09. 1.02 "Acquiror Shares" has the meaning set forth in Recital C. -2- 1.03 "Acquiror Stock" has the meaning set forth in Recital C. 1.04 "Balance Sheet" means the adjusted unaudited balance sheet of an SPV as of March 31, 2001 previously delivered to Acquiror. 1.05 "Closing" means the closing of the transactions contemplated hereby. 1.06 "Closing Date" means the date on which the Closing occurs. 1.07 "Closing Opinion" has the meaning set forth in Section 3.07. 1.08 "Contracts" has the meaning set forth in Section 4.10. 1.09 "Disclosure Schedule" means the disclosure schedules accompanying this Agreement which the Transferors have prepared. 1.10 "Encumbrance" means any lien, pledge, mortgage, security interest, maritime lien, time or demise charter, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. 1.11 "Environmental Claim" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by any Transferor or SPV or the violation or alleged violation of any Environmental Law. 1.12 "Environmental Law" means any Law or legally binding and enforceable treaty or convention concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act and the Oil Pollution Act of 1990, each of the foregoing as amended or supplemented from time to time. 1.13 "Escrow Agent" has the meaning ascribed thereto in the Plan of Recapitalization. 1.14 "Escrow Agreement" means the Escrow Agreement by and among Acquiror, the Transferors, and the other parties thereto, in substantially the form of Exhibit E with such changes thereto as may be reasonably required by the Escrow Agent. 1.15 "Financial Statements" means (i) with respect to each of Equili Company, L.P. and Equili Company II, L.P., the unaudited balance sheet and statements of earnings prepared on a tax accounting basis, for each of the fiscal years ended December 31, 2000, 1999 and 1998 and (ii) with respect to each of Genmar Alexandra, LLC, whose only material asset is Genmar Alexandra, Ltd., and Genmar II, LLC, whose only material assets are Genmar Hector, Ltd. and Genmar Pericles, Ltd., the audited balance sheet, and statements of earnings, equity and cash -3- flows, prepared in accordance with GAAP for the fiscal year ended December 31, 2000, in each case as previously delivered to Acquiror. 1.16 "GAAP" means United States generally accepted accounting principles, as in effect on the date of this Agreement, consistently applied. 1.17 "Governmental Body" means any U.S. or foreign federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.18 "Indemnity Shares" means the Acquiror Shares to be held in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, the number of which are subject to adjustment pursuant to the remainder of Section 9 of the Plan of Recapitalization. 1.19 "Interim Financial Statements" means the unaudited financial statements of an SPV as of, and for the period ended March 31, 2001 previously delivered to Acquiror. 1.20 "IPO Price" means the price per share of Acquiror Stock fixed in the initial public offering of the Acquiror Stock. 1.21 "Law" means any federal, state, local, foreign or international law (including common law), statute, code, ordinance, rule, regulation or other legally enforceable requirement. 1.22 "Licenses" has the meaning set forth in Section 4.14(b). 1.23 "Lockup Agreement" means the Lockup Agreement executed by each Transferor regarding the Acquiror Shares in the form of EXHIBIT A. 1.24 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.25 "Manager" has the meaning set forth in Section 6.07. 1.26 "Material Adverse Effect" means any material adverse effect on any SPV's business, operations, assets, financial condition, liabilities, or results of operations or the ability of any Transferor to perform its obligations hereunder. 1.27 "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. -4- 1.28 "Person" means an individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative or any government or any agency or political subdivision thereof. 1.29 "Pre-Closing Period" means all taxable periods ending on or before the Closing Date and the portion ending on or before the Closing Date of any taxable period that includes (but does not end on) the Closing Date. 1.30 "Registration Rights Agreement" means the Registration Rights Agreement by and between Acquiror and recipients of Acquiror Stock attached hereto as EXHIBIT B. 1.31 "Registration Statement" means the draft Registration Statement of Acquiror on Form S-1 concerning the initial public offering of Acquiror Stock, attached hereto as EXHIBIT D. 1.32 "Returns" means returns, reports, and information statements with respect to Taxes required to be filed with any taxing authority, including consolidated, combined and unitary tax returns. 1.33 "SPV" has the meaning set forth in Recital A. 1.34 "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any U.S. federal, state, local or non-U.S. taxing authority, including (a) income, franchise, profits, gross receipts, AD VALOREM, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.35 "Texas Matter" has the meaning set forth in Section 7.12. 1.36 "Transferring SPVs" has the meaning set forth in Section 7.07. 1.37 "Underwriting Agreement" means the Underwriting Agreement with respect to Acquiror Stock by and among Acquiror, Lehman Brothers, Inc., ABN AMRO Rothschild, LLC and Jefferies & Company, Inc. 1.38 "Vessel Transfer" has the meaning set forth in Section 7.07. 1.39 "Vessels" means the motor tankers described in SCHEDULE 1. 1.40 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by each Transferor, substantially in the form of EXHIBIT C. 1.41 COMMONLY USED TERMS. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof," "herein," and "hereinafter" refer to this Agreement. -5- (b) "Including" means including, without limitation (whether or not so expressed). (c) References to Sections, Recitals, Exhibits, Annexes, and Schedules mean, respectively, Sections, Recitals, Exhibits, Annexes, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. 2. EXCHANGE OF SECURITIES. 2.01 GENERALLY. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, Transferors with full title guarantee shall sell, assign, transfer and deliver absolutely to Acquiror, and Acquiror shall purchase and accept from Transferors, all of the SPV Shares and all of the Transferors' rights, title, and interest in the SPV Shares, free and clear of all Encumbrances in exchange for the number of Acquiror Shares specified pursuant to Section 2.02. Each of Genmar Kentucky Ltd. and Genmar West Virginia, Ltd. is a Maltese company which will own the KENTUCKY and WEST VIRGINIA Vessels respectively as of the Closing. Although this Agreement is governed by New York law (as provided in Section 12.09), to the extent that Maltese law is relevant to the terms and conditions hereof, the Parties agree that this Agreement shall constitute a contract of exchange of shares (as opposed to a contract of sale of shares) for purposes of Maltese law. 2.02 PLAN OF RECAPITALIZATION. The number of shares, timing of issuance, and all other aspects of the issuance of Acquiror Shares to the Transferors in consideration of the sale, assignment, transfer, and delivery of all SPV Shares to Acquiror shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference. Acquiror shall deposit 10% of the Acquiror Shares to which each Transferor is entitled in escrow in the Purchase Price Calculation Account as defined in Section 9(A)(iii) of the Plan of Recapitalization, which Acquiror Shares shall be distributed in accordance with the remainder of Section 9 of the Plan of Recapitalization. Acquiror shall deposit an additional 10% of the total number of Acquiror Shares to which each Transferor is entitled under the Plan of Recapitalization in escrow in the Indemnity Account as defined in Section 9(A)(iii) of the Plan of Recapitalization. To the extent any Indemnity Shares are not subject to an indemnification claim against any Transferor under Section 11.02 within six months after the Closing, Acquiror shall instruct the Escrow Agent to release such Indemnity Shares to the Transferors entitled to them in accordance with the Plan of Reorganization. Acquiror shall instruct the Escrow Agent to release any Indemnity Shares that are subject to such an indemnification claim to the Transferors to the extent Acquiror and the Transferors or a court of competent jurisdiction finally resolves such claim in favor of the Transferors without the possibility of appeal. 3. CLOSING. The Closing shall be held at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, NY 10022 contemporaneously with the closing of the initial public offering contemplated by the Registration Statement. The following shall take place at the Closing: -6- 3.01 DELIVERY OF SHARE CERTIFICATES, ETC. The Transferors shall deliver or cause to be delivered to Acquiror (a) share certificates representing all the equity interests of the SPVs (including all issued and outstanding SPV Shares), accompanied by share transfer forms duly endorsed in blank or accompanied by duly executed instruments of transfer and (b) a certified copy of the Register of Members of the SPVs showing Acquiror as the owner of all of the SPV Shares. 3.02 DELIVERY OF ACQUIROR SHARES. Acquiror shall deliver (or provide evidence satisfactory to the Transferors that it has delivered) to the Escrow Agent certificates representing all of the Acquiror Shares to be issued hereunder. 3.03 DELIVERY OF SCHEDULE OF PURCHASED SHARES. Acquiror shall deliver to the Transferors a schedule reflecting issued and outstanding capital stock of Acquiror as of the Closing including the number of Acquiror Shares to be delivered to the Transferors and the number of Acquiror Shares delivered to the various escrow accounts for the benefit of each Transferor as more particularly described in the Plan of Recapitalization. 3.04 RESIGNATION OF DIRECTORS AND OFFICERS OF THE SPVS. Transferors shall cause the directors and officers of the SPVs to resign as of the Closing, and Acquiror shall be entitled to designate their replacements. 3.05 LOCKUP AGREEMENT. The Transferors shall execute and deliver to Acquiror the Lockup Agreement. 3.06 REGISTRATION RIGHTS AGREEMENT. The Transferors and Acquiror shall execute and deliver the Registration Rights Agreement. 3.07 LEGAL OPINION. Marshall Islands counsel for Acquiror shall deliver to the Transferors an opinion (the "Closing Opinion") containing substantially the items set forth in EXHIBIT E in a form reasonably acceptable to counsel to the Transferors. 3.08 TRANSFER TAXES. Acquiror shall be liable for and shall pay all transfer or similar taxes, direct or indirect, if any, attributable to the transfer of the SPV Shares (but not any taxes based on income or receipts) and, in connection therewith, shall affix any necessary transfer stamps to any certificates evidencing the SPV Shares. 3.09 INDEBTEDNESS. Acquiror shall repay the indebtedness listed on Section 4.06(b)(2) of the Disclosure Schedule. 3.10 ESCROW AGREEMENT. Each Transferor, Acquiror and the Escrow Agent shall execute and deliver the Escrow Agreement. 4. REPRESENTATIONS AND WARRANTIES OF TRANSFERORS. The Transferors hereby represent and warrant to Acquiror as follows: 4.01 ORGANIZATION AND GOOD STANDING OF TRANSFERORS. Each of Genmar Alexandra, LLC, Genmar II, LLC, Equili Company LLC, and Equili Company II, LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of Delaware. Each of Equili Company, L.P. and Equili Company II, L.P. is a limited partnership duly -7- organized, validly existing, and in good standing under the laws of New York. Each Transferor has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each Transferor is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. Other than the SPVs, no Transferor has any subsidiaries or owns any equity interest in any Person whatsoever. 4.02 ORGANIZATION AND GOOD STANDING OF SPV. Each of Genmar Alexandra, Ltd., Genmar Hector, Ltd. and Genmar Pericles, Ltd. is a company with limited liability duly organized, validly existing, and in good standing under the laws of the Cayman Islands without limitation on the duration of its existence and has qualified and is in good standing as a Foreign Maritime Entity under the laws of the Republic of the Marshall Islands. Each of Kentucky Shipping Company Ltd. and West Virginia Maritime Company Ltd. which operate the KENTUCKY and WEST VIRGINIA Vessels respectively pursuant to bareboat charters is a company with limited liability, duly organized, validly existing and in good standing under the laws of Malta. Each of Genmar Kentucky Ltd. and Genmar West Virginia, Ltd. is a company with limited liability, duly organized, validly existing and in good standing under the laws of Malta. Each SPV has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. Each SPV is duly qualified to transact business and is in good standing in each jurisdiction wherein the nature of its contracts, the business done, or the property owned, leased, or operated by it requires such qualification. Copies of the Memorandum of Association and Articles of Association of each SPV and all amendments to each of the foregoing have been delivered to Acquiror and are true, complete, and accurate in all respects. The minutes of all meetings of the directors and members of each SPV and all other records regarding the governance or ownership of each SPV have been made available to Acquiror and are true, complete and accurate in all material respects. No SPV has any subsidiaries or owns any equity interest in any Person whatsoever. 4.03 CAPITALIZATION; TITLE. (a) The authorized capital and number of issued shares of capital (to the extent applicable) of each SPV are as set forth in Section 4.03(a) of the Disclosure Schedule. All SPV Shares are validly issued, fully paid, and non-assessable. The Transferors own, beneficially and of record, and have good, valid, and marketable title to all of the SPV Shares, free and clear of any and all Encumbrances. No Person has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from any Transferor of any SPV Shares. (b) There are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require any SPV to issue, sell or otherwise cause to become outstanding any equity of such SPV or any securities convertible into, exchangeable for or carrying a right or option to purchase any equity of such SPV or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of equity of such SPV. There are no outstanding agreements among partners or members, registration rights agreements, or -8- rights of first refusal pertaining to equity interests of any SPV. None of the outstanding equity securities of any SPV has been issued in violation of any rights of any Person or in violation of any Law. 4.04 AUTHORIZATION; ENFORCEABILITY. The execution and delivery of this Agreement by each Transferor has been duly authorized by all necessary action required on the part of such Transferor. This Agreement has been duly executed and delivered by each Transferor and constitutes the legal, valid, and binding obligation of such Transferor, enforceable against such Transferor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 4.05 NO CONFLICTS. Neither the execution and delivery by the Transferors of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the organizational documents of any Transferor, any resolutions of the members or the partners, as the case may be, of any Transferor, the memorandum of association or articles of association of any SPV, any resolutions of the directors or members of any SPV, or any governing documents of any Transferor or SPV analogous to the foregoing, or (b) except as would not be reasonably likely to have a Material Adverse Effect, conflict with, violate, result in the breach of any term of, result in the acceleration of performance of any obligation under, constitute a default under, require the consent or approval of or any notice to or filing with any third party or Governmental Body, or create an Encumbrance on any of the properties or assets of any Transferor or SPV under, (x) any note, mortgage, deed of trust, lease or other agreement or instrument to which any Transferor or SPV is a party or by which any of their respective properties or assets is bound, or (y) any law, order, rule, regulation, decree, writ, injunction, or License of any Governmental Body having jurisdiction over any Transferor or SPV, or any of their respective properties. 4.06 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. (a) The Financial Statements and the Interim Financial Statements (true, complete and accurate copies of which have been previously delivered to Acquiror) have been prepared from the books and records of the entities shown on a consistent basis (and, in the case of the audited Financial Statements, in accordance with GAAP applied on a consistent basis) throughout the periods covered thereby and fairly present in all material respects the financial condition of the SPVs as at their respective dates and the results of operations (and, in the audited Financial Statements, the cash flows) of the SPVs for the periods covered thereby. (b) As of the date of each Balance Sheet, other than those set forth in Section 4.06(b)(1) of the Disclosure Schedule, the SPVs had no material liabilities, debts, or obligations of the type required to be reported on a balance sheet prepared in accordance with GAAP (including the footnotes thereto) (whether absolute, accrued, contingent or otherwise and in the case of any such liabilities, debts or obligations in respect of any Taxes, as determined on the basis of Tax Law as in effect as of the date of the Balance Sheet), except for liabilities, debts, or obligations reflected or reserved against in the applicable Balance Sheet or the Financial Statements (including the footnotes thereto). Since the date of each Balance Sheet, the SPVs have conducted their respective -9- businesses in the ordinary course consistent with past practice and have not incurred any liabilities, debts, or obligations of the type required to be reported on a balance sheet prepared in accordance with GAAP (including the footnotes thereto) (whether absolute, accrued, contingent or otherwise), except for liabilities incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. Since the date of each Balance Sheet, there have been no material adverse change in the business, operations, assets, condition (financial or otherwise), liabilities, or results of operations of the SPVs (other than general economic or industry conditions), and, to the Transferors' knowledge, no event has occurred or facts or circumstances exist which would be reasonably likely to result in a Material Adverse Effect. The only indebtedness of the SPVs or the Maltese entities to which the KENTUCKY and WEST VIRGINIA Vessels are to be transferred prior to Closing or incurred by the Vessels at the Closing Date will be (A) the indebtedness listed in Section 4.06 (b)(2) of the Disclosure Schedule which indebtedness will include new debt with terms and conditions reasonably satisfactory to Acquiror in an aggregate amount of up to $10 million and which indebtedness will not aggregate in excess of $59,000,000 and (B) current liabilities, other than for borrowed money, reflected or reserved against in the SPV's or entity's Balance Sheet delivered to Acquiror or otherwise incurred in the ordinary course of business and not reasonably likely to have a Material Adverse Effect. 4.07 RECEIVABLES AND PAYABLES. Section 4.07 of the Disclosure Schedule sets forth a true, correct, and complete list of all accounts and notes receivable, trade notes and trade accounts, and accounts and notes payable, together with the amounts thereof, as of March 31, 2001. All of the accounts and notes receivable and trade notes and trade accounts owing to the SPVs constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business. All accounts payable and notes payable by the SPVs arose in bona fide transactions in the ordinary course of business. 4.08 TAXES. (a) Except as set forth in Section 4.08(a) of the Disclosure Schedule, the SPVs have timely filed with the appropriate taxing authorities all material Returns required to be filed by them (taking into account any extension of time to file). The information on such Returns is complete and accurate in all material respects. The SPVs have paid on a timely basis all Taxes (whether or not shown on any Return) due and payable, except for Taxes (i) which the applicable SPV believes in good faith are not due and payable because they are being diligently contested by appropriate proceedings, (ii) for which the applicable SPV has set aside on its books reserves to the extent required by GAAP, or (iii) for which the failure to pay would not be reasonably likely to have a Material Adverse Effect. There are no liens for any material Taxes (other than for current Taxes not yet due and payable) upon the assets of any SPV. (b) Except as set forth in Section 4.08(b) of the Disclosure Schedule, no unpaid (or unreserved in accordance with GAAP) deficiencies for Taxes have been claimed, proposed or assessed in writing by any taxing authority or other Governmental Body with respect to any SPV for any Pre-Closing Period, and there are no pending or, to the Transferors' knowledge, threatened, audits, investigations or claims or issued and outstanding assessments for or relating to any liability in respect of Taxes of any SPV. No extension of a statute of limitations relating to any Taxes is in effect with respect to any SPV. -10- (c) (i) Each SPV has made provision on its Balance Sheet in accordance with GAAP for all Taxes payable by it with respect to any Pre-Closing Period as determined on the basis of Tax Law in effect as of the date hereof, which will not have been paid prior to the Closing Date; (ii) except as set forth in Section 4.08(c)(ii) of the Disclosure Schedule, no SPV is liable for Taxes of any other Person or is currently under any contractual obligation to or a party to any tax sharing agreement or any other agreement providing for payments by such SPV with respect to Taxes; (iii) no written claim has ever been made by a taxing authority in a jurisdiction where any SPV does not currently file Returns that such SPV is or may be subject to taxation by that jurisdiction; and (iv) no SPV has filed or been included in a combined, consolidated or unitary return (or substantial equivalent thereof) of any Person. 4.09 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. (a) No SPV owns or leases any real property. (b) Except as set forth in Section 4.09(b) of the Disclosure Schedule, each SPV has good title to the Vessel listed as owned by such SPV in SCHEDULE 1 and has either good title to or a valid leasehold interest, license or similar interest in all other properties and assets, real and personal, tangible and intangible, that it owns, purports to own, or are necessary in the operation of its business, and all those other properties and assets reflected on its books and records and on its Balance Sheet (except those sold or disposed of subsequent to the date thereof in the ordinary course of business consistent with past practice), free and clear of all Encumbrances. None of such properties or assets leased by any SPV are subject to any sublease, sublicense or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any portion thereof. 4.10 CONTRACTS. Each oral or written agreement to which any Transferor or SPV is a party and which is material to the business of any SPV as it is currently conducted (a "Contract") is legal, valid, binding and in full force and effect and is enforceable by such Transferor or SPV, as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity. Except as set forth in Section 4.10 of the Disclosure Schedule, each Transferor and SPV are in compliance and are not (with or without the lapse of time or the giving of notice, or both) in breach of or in default under any of the Contracts to which they are a party except where any such breaches or defaults would not in the aggregate be reasonably likely to have a Material Adverse Effect, and, to the Transferors' knowledge, no other party to any of the Contracts is (with or without the lapse of time or the giving of notice, or both) in material breach of or in material default under any of the Contracts. Except as set forth in Section 4.10 of the -11- Disclosure Schedule, to the Transferors' knowledge, there is no pending dispute under any of the Contracts, nor has any other party thereto notified any Transferor or SPV of any unresolved complaint regarding the performance of any Transferor or SPV thereunder, except where any such disputes or complaints would not in the aggregate be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, no Transferor or SPV has received any notice of any termination or non-renewal of any Contract, nor is any Transferor aware that any other party to any Contract intends to terminate or not renew any such Contract. No SPV is party to or bound by any contract, agreement or arrangement (whether oral or written) which has been entered into without the participation of the Manager except (i) as set forth in Section 4.10 of the Disclosure Schedule, or (ii) contracts, agreements and arrangements entered in the ordinary course of business which are terminable at will. Except as set forth in Section 4.10 of the Disclosure Schedule, no SPV is party to or bound by any contract, agreement or arrangement with any Transferor or its affiliates. 4.11 INSURANCE. Each insurance policy currently maintained by or for the benefit of any SPV is in full force and effect (free from any presently exercisable right of termination on the part of the insurance company issuing such policy prior to the expiration of the term of such policy) and all premiums due and payable in respect thereof have been paid except where the failure to pay would not be reasonably likely to have a Material Adverse Effect. No Transferor or SPV has received notice of cancellation or non-renewal of any such policy. The transactions contemplated by this Agreement will not give rise to a right of termination of any such policy by the insurance company issuing the same prior to the expiration of the term of such policy. 4.12 LITIGATION. Except as set forth in Section 4.12 of the Disclosure Schedule, there is no lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding (excluding any Environmental Claims, which are governed exclusively by Section 4.13 of this Agreement) or notice thereof pending or, to the Transferors' knowledge, threatened against any Transferor or SPV or their respective properties or assets, including the Vessels, or any director, officer, or employee of any SPV, in his or her capacity as such, which would be reasonably likely to have a Material Adverse Effect. Neither the Transferors nor the SPVs are identified as a party subject to any restrictions or limitations under any judgment, order or decree of any Governmental Body which, either singularly or in the aggregate, would be reasonably likely to have a Material Adverse Effect. 4.13 ENVIRONMENTAL MATTERS. Except as would not be reasonably likely to have a Material Adverse Effect: (a) Except as set forth in Section 4.13(a) of the Disclosure Schedule, the operations and properties of the SPVs and the Vessels are in compliance with applicable Environmental Laws, which compliance includes the possession by the SPVs of all permits and governmental authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof, and the SPVs have not received any written notice of any violation of any Environmental Law. (b) Except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no Environmental Claims pending or, to the Transferors' knowledge, threatened against the Transferors, the SPVs, or any of their respective properties or assets (including the Vessels) or any director, officer or employee of the SPVs, in his or her capacity as such, or any person or entity whose liability for any Environmental Claim that Transferors or the SPVs have retained or assumed. (c) Except as set forth on Section 4.13(c) of the Disclosure Schedule, to the knowledge of the Transferors and the SPVs, there are no past or present actions, -12- circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the SPVs, the Vessels or any person or entity whose liability for any Environmental Claim the Transferors or the SPVs have retained or assumed. 4.14 COMPLIANCE WITH LAW. (a) Except as would not be reasonably likely to have a Material Adverse Effect, each SPV is and has been in compliance in all material respects with all applicable laws, statutes, rules, ordinances, regulations, orders and decrees governing the conduct or operation of its business (excluding Environmental Laws which are governed exclusively by Section 4.13 of this Agreement), and all of its Licenses. No SPV has received any notice of any violation of any such law, statute, rule, ordinance, regulation, order, decree or License. (b) Except as would not be reasonably likely to have a Material Adverse Effect, (i) each SPV has all governmental licenses, approvals, authorizations, registrations, consents, orders, certificates, decrees, franchises and permits (collectively, "Licenses") necessary to conduct its business as currently conducted and such Licenses are in full force and effect; and (ii) no proceeding is pending or, to Transferor's knowledge, threatened seeking the revocation or limitation of any such License. 4.15 EMPLOYEES. No SPV now has, nor has it since the date of its formation had, any employees. 4.16 BOOKS AND RECORDS. The books and records of each SPV with respect to such SPV, its operations, employees and properties have been maintained in the usual, regular and ordinary manner, all entries with respect thereto have been accurately made and all transactions have been accurately accounted for in all material respects. 4.17 INVESTMENT PURPOSE; PRIVATE PLACEMENT. (a) Each Transferor is acquiring the Acquiror Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. (b) Each Transferor acknowledges that the issuance of the Acquiror Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Each Transferor acknowledges that the Acquiror Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (c) Each Transferor is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Acquiror Shares. -13- (d) Each Transferor, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Acquiror Shares and is able to bear the economic risk of such investment. (e) Each Transferor has had a full opportunity to ask questions of and receive answers from representatives of Acquiror concerning an acquisition of the Acquiror Shares, including financial information concerning Acquiror. Each Transferor was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Acquiror located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by each Transferor have been made available to each Transferor and the persons that each Transferor has retained to advise it with respect to such an acquisition, and that each Transferor and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (f) No Transferor is relying on Acquiror or any of its officers, directors, employees, founders or agents with respect to the tax and other economic considerations of an investment in the Acquiror Shares. Each Transferor has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in the Acquiror Shares. No Transferor is relying on any representations or warranties of Acquiror with respect to the transactions contemplated hereunder other than those contained in Section 6 or on any representations of any officer, director, employee, founder or agent of Acquiror. 4.18 REGISTRATION STATEMENT INFORMATION. Each Transferor has received and reviewed the Registration Statement. All information concerning the Transferors in the Registration Statement is complete and correct. Any information provided by any Transferor for inclusion in revisions to the Registration Statement after the date of this Agreement will be complete and correct. 5. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR PARTIES. The Transferor Parties hereby represent and warrant to Acquiror that except with respect to the potential sale by Transferors in the overallotment option in connection with Acquiror's initial public offering, no Transferor Party or Transferor is under any binding commitment or obligation to sell, transfer, or otherwise dispose of the Acquiror Shares to be transferred to the Transferors pursuant to this Agreement except as provided in the limited liability company agreement of each of Genmar Alexandra, LLC and Genmar II, LLC. 6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror represents and warrants to each Transferor as follows: 6.01 ORGANIZATION AND GOOD STANDING. Acquiror is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 6.02 CAPITALIZATION. The authorized capital of Acquiror consists of 75,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share, of which none are outstanding as of the date hereof. Immediately following -14- the Closing, the outstanding capital stock of Acquiror shall be as set forth in the schedule delivered pursuant to Section 3.03. 6.03 AUTHORIZATION. The execution and delivery of this Agreement by Acquiror have been duly authorized by all necessary corporate action required on the part of Acquiror. This Agreement has been duly executed and delivered by Acquiror and constitutes the legal, valid, and binding obligation of Acquiror, enforceable against Acquiror in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the rights of creditors generally and by general principles of equity. 6.04 NO CONFLICTS. Neither the execution and delivery by Acquiror of this Agreement nor the consummation by Acquiror of the transactions contemplated hereby will (a) conflict with or violate the Certificate of Incorporation or By-Laws of Acquiror, or (b) conflict with, violate, result in the breach of any term of, constitute a default under or require the consent or approval of or any notice to or filing with any Person under, (x) any note, mortgage, deed of trust or other agreement or instrument to which Acquiror is a party or by which Acquiror is bound, or (y) any law, order, rule, regulation, decree, writ or injunction of any Governmental Body having jurisdiction over Acquiror (except where such conflict, violation, breach or default, or the failure to obtain such consent or approval, give such notice or make such filing, would not be reasonably likely to have a Material Adverse Effect on the business, operations, assets, conditions, liabilities or results of operations or materially adversely impair the ability of Acquiror to consummate the transactions contemplated hereby). 6.05 LITIGATION. No lawsuit, governmental investigation or legal, administrative or arbitration action or proceeding is pending or, to the knowledge of Acquiror, threatened against Acquiror or any of its properties or assets, or any director, officer or employee of Acquiror in his or her capacity as such, which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. 6.06 ACQUIROR SHARES. The issuance, transfer, and delivery of the Acquiror Shares hereunder have been duly authorized by all required corporate action on the part of Acquiror, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances. 6.07 REPRESENTATIONS RELATING TO SPVS. To the knowledge of Acquiror which for purposes hereof shall mean the knowledge of General Maritime Corporation, a Marshall Islands corporation, to be renamed upon its acquisition by Acquiror, which has provided commercial management services for the Vessels and is being acquired by Acquiror prior to the Closing (the "Manager), each of the representations of the Transferors and the SPVs set forth in Sections 4.05(b)(x), 4.06, 4.07, 4.09(b), 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.16 (solely with respect to the financial information contained in the books and records of any SPV historically provided by the Manager) of this Agreement is true and correct in all material respects as it relates to matters relating to activities performed by such corporation to date. 6.08 PRIVATE PLACEMENT. Acquiror is acquiring the SPV Shares solely for the purpose of ownership for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law. Acquiror acknowledges that the SPV -15- Shares have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Acquiror acknowledges that the SPV Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. 6.09 WAIVER OF MANAGEMENT FEE. Acquiror shall cause the Manager to waive, as of the Closing, its right pursuant to Section 15 of the management agreements listed on SCHEDULE 2 which the Manager has entered with respect to the Vessels to receive a management fee from any Transferor for any period following the Closing Date or as a result of the consummation of the transactions contemplated by this Agreement. 6.10 LIQUIDATION OF SPVS. Acquiror has no present intention to liquidate any SPV or make any election or take any action which would be treated under the Code as resulting in the liquidation of any SPV. 7. COVENANTS; EFFECT OF TRANSFER OF VESSELS. The Parties hereby covenant and agree as follows: 7.01 CONDUCT OF BUSINESS. From the date hereof until the Closing, the Transferors will cause each of the SPVs to conduct its business in the ordinary course, and without limiting the generality of the foregoing, not do any of the following, without the prior written consent of Acquiror: (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements or understandings of the type referred to in Section 4.03(b) with respect to, the SPV Shares or any other of its securities, or alter any term of any of its outstanding securities or make any change in its outstanding shares or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, split or combination, exchange or readjustment of shares, dividend or otherwise; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to any holder of its share capital; (e) redeem, purchase or otherwise acquire, directly or indirectly, the SPV Shares; or (f) enter into any commitment to do any of the foregoing. Notwithstanding the foregoing, the Parties acknowledge that prior to the Closing the SPVs that own the KENTUCKY and WEST VIRGINIA Vessels shall transfer such Vessels to Genmar Kentucky Ltd. and Genmar West Virginia Ltd. respectively in accordance with Section 7.07. -16- 7.02 NO SOLICITATION OF ALTERNATIVE TRANSACTION. No Transferor shall, and the Transferors shall cause the SPVs not to, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of such Transferor, any SPV, or their assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving any Transferor or SPV (collectively, "Acquisition Proposals"). Each Transferor shall promptly inform the Acquiror of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Acquiror a copy of any such written inquiry. 7.03 TAXES AND COOPERATION ON TAX MATTERS. (a) TAX RETURNS; LIABILITY FOR TAXES; INDEMNIFICATION. (i) Acquiror shall cause each SPV to prepare and file the Returns for the taxable periods of such SPV ending on or prior to the Closing Date; PROVIDED that the Transferors shall provide full cooperation and support in the preparation of such Returns. All reasonable, out-of-pocket costs, fees, and expenses relating to the preparation and filing of such Returns shall be the responsibility of the SPVs. (ii) Acquiror shall be liable and shall indemnify the Transferors for any and all Taxes imposed on the SPVs (but not the Transferors) for which the Transferors are liable relating to or apportioned to any taxable year or portion thereof beginning and ending after the Closing Date (except to the extent no provision was properly made for such Tax on the applicable Balance Sheet in accordance with GAAP as set forth in Section 4.8(c)(i) of this Agreement). Indemnity payments made pursuant to this Section 7.03(a)(ii) shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any tax benefit (E.G., increased basis of an asset or a deduction available in a future year) received as a result of such payment (taking into account the time value of money). Acquiror shall not settle, either administratively or after the commencement of litigation, any Tax claim imposed on the SPVs for which the Transferors have indemnified Acquiror pursuant to this Agreement without the prior written consent of the Transferors which consent may not be unreasonably withheld. (iii) The value of any cash or securities paid, transferred, or withheld in satisfaction of the indemnification obligations of Acquiror, the SPVs, or the Transferors under this Agreement will be treated for tax purposes as an adjustment to the purchase price for the SPV Shares. (iv) The Transferors shall notify Acquiror in writing of, and keep Acquiror fully informed as to the status of, any pending or threatened Tax audits or assessments that may result in a liability for which the Acquiror has indemnified the Transferors pursuant to this Section 7.03(a). Acquiror may -17- control the audits and any proceedings relating to any such Tax claim, on condition that (a) it keeps the Transferors informed on a current basis of the status of any such proceedings and (b) the Transferors and their counsel have the right to participate, at the Transferors' expense, in any such proceeding. No Transferor shall settle, either administratively or after the commencement of litigation, any such Tax claim without the prior written consent of Acquiror, which consent may not be unreasonably withheld. (b) No new elections with respect to Taxes, or any changes in current elections with respect to Taxes, of the Transferors or any SPV which may have an effect on any SPV for periods ending after the Closing Date shall be made after the date of this Agreement without the prior written consent of Acquiror. (c) Acquiror shall take no position on any tax return or take any action that is inconsistent with the intention of the Parties that the transfers of the SPVs qualify as transactions described in Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"), including, without limitation, that Acquiror shall not, at any time within one year following consummation of the transactions contemplated herein, liquidate any SPV, or make any election or take any action which would be treated under the Code as resulting in the liquidation of any SPV. (d) COOPERATION. (i) Acquiror and the Transferors shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Returns pursuant to this Section 7.03 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Transferors (before the Closing) and Acquiror (after the Closing) shall each cause the SPVs (A) to retain all books and records with respect to Tax matters pertinent to the SPVs relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other Party so requests, each SPV or Transferor, as the case may be, shall allow the other Party to take possession of such books and records. (ii) Acquiror and the Transferors further agree, upon request, to use good faith efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby); provided that such certificate or other document does not increase the Tax of Acquiror or the Transferors. -18- 7.04 EXECUTION OF DOCUMENTS. Each Transferor shall execute and deliver to Acquiror the Lockup Agreement. Acquiror and each Transferor shall execute and deliver to each other the Registration Rights Agreement. 7.05 FURTHER ASSURANCES. Each Transferor agrees to execute and deliver, and to cause each SPV to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Acquiror may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. Without limiting the generality of the foregoing, to the extent that any assets, Contracts, licenses, permits, or insurance policies are necessary for the conduct of the business of the SPVs in substantially the manner currently conducted and owned by or held in the name of the Transferors, the Transferors shall execute and deliver such additional documents and instruments and perform such additional acts as are necessary to transfer such assets, Contracts, licenses, permits, and insurance policies to the SPVs. 7.06 RESTRICTIONS ON SECURITIES. Each Transferor acknowledges and agrees that any certificates representing Acquiror Shares shall bear the following legend and that the transfer agent of Acquiror will be instructed to place a stop transfer order prohibiting transfers of Acquiror Shares except in conformity with such legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. 7.07 TRANSFER OF VESSELS; SUBSTITUTION OF SPVS. Prior to the Closing, (i) Equili Company, L.P. shall transfer the KENTUCKY Vessel to Genmar Kentucky Ltd. and Equili Company II, L.P. shall transfer the WEST VIRGINIA Vessel to Genmar West Virginia, Ltd. pursuant to terms and conditions, including the incurrence of debt in the aggregate amount of $10 million listed on Section 4.06(b)(2) of the Disclosure Schedule, and arrangements which are reasonably satisfactory to Acquiror (the "Vessel Transfers") and (ii) from and after the date of such transfers, the Transferors shall cause each of Genmar Kentucky Ltd. and Genmar West Virginia, Ltd. to comply with the terms of this Agreement whereupon they will be substituted hereunder as SPVs for Equili Company, L.P., Equili Company II, L.P., Kentucky Shipping Company Ltd. and West Virginia Maritime Company Ltd. (in such capacity, the "Transferring SPVs"). Upon the effective date of the Vessel Transfers, the Transferring SPVs shall no longer be deemed SPVs under this Agreement but Equili Company, L.P. and Equili Company II, L.P. shall remain as Transferors. 7.08 REPRESENTATIONS, WARRANTIES AND COVENANTS. Transferors agree and represent that on the date of the Vessel Transfers, (i) each and every representation and warranty with respect to (x) the Transferring SPVs and (y) the SPV Shares issued by Equili Company, L.P. and Equili -19- Company II, L.P., and (ii) each and every covenant to be performed by any Transferring SPV, which are contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall be deemed made, in the case of a representation and warranty, and assumed, in the case of a covenant, as to Genmar Kentucky Ltd. and Genmar West Virginia, Ltd. as of such date and shall be true and correct as of such date and shall be repeated at the Closing. 7.09 OUTSTANDING LITIGATION. Transferors agree that (i) the litigation to which Marathon Ashland Petroleum LLC is a party described in Section 4.12 of the Disclosure Schedule (the "Action") shall remain with Equili Company, L.P. and Equili Company II, L.P. and neither Acquiror, Genmar Kentucky Ltd. nor Genmar West Virginia, Ltd. will acquire any interest in any right of recovery thereunder and (ii) Acquiror shall be indemnified with respect to the Action as provided in Section 11.04. 7.10 REPAYMENT OF INDEBTEDNESS. Prior to the Closing, Transferors shall cause all of the indebtedness of the SPVs other than the indebtedness set forth on Section 4.06(b)(2) of the Disclosure Schedule to be repaid. 7.11 OVERALLOTMENT SALES. If Transferors have the opportunity to sell Acquiror Shares in the underwriters' overallotment option in Acquiror's initial public offering, then at the closing of the issuance of any Acquiror Shares pursuant to such overallotment option, Acquiror shall make substantially similar representations and warranties to such selling Transferors as Acquiror makes to the underwriters and obtain for such selling Transferors an accountant's comfort letter and legal opinions substantially similar to those provided to the underwriters solely for such selling Transferors' use in their diligence review for sale under such overallotment option; provided, however, that such selling Transferors shall provide any information or materials reasonably requested by such accountants and counsel. 7.12 COOPERATION RELATING TO HECTOR VESSEL. Prior to the Closing, Transferors shall cooperate fully with, and to the extent reasonably requested by, Acquiror in connection with its due diligence investigation with respect to the matter (the "Texas Matter") set forth on Section 4.13(b) of Disclosure Schedule. 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR. The obligations of Acquiror under Sections 2, 3, and the Plan of Recapitalization shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Acquiror; provided however that notwithstanding the foregoing, the failure of any condition specified in this Section 8 with respect to any single SPV or Transferor shall not relieve Acquiror of its obligations to consummate the transactions described in this Agreement and in the Plan of Recapitalization with respect to the Transferors except that (i) a failure with respect to any SPV shall relieve Acquiror of such obligations with respect to the Transferors which have an equity interest in such SPV as to such SPV and (ii) a failure with respect to a Transferor shall relieve Acquiror of such obligations with respect to other Transferors with equity interests in the SPVs to which such failure is relevant as to such SPVs: 8.01 REPRESENTATIONS AND WARRANTIES. Each and every representation and warranty of each Transferor contained or provided in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. -20- 8.02 COMPLIANCE WITH COVENANTS. Each Transferor shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such Transferor under this Agreement at or before the Closing. 8.03 LACK OF ADVERSE CHANGE. Since the date of each Balance Sheet, there has not occurred any circumstance or event which, individually or in the aggregate, has had or is reasonably likely to result in a Material Adverse Effect. 8.04 REGULATORY APPROVALS. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement shall have been obtained. 8.05 CONSENTS OF THIRD PARTIES. All material consents from third parties necessary for the execution and delivery of this Agreement by Transferors and the consummation of the transactions contemplated hereby shall have been obtained in writing. 8.06 NO VIOLATION OF ORDERS. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Acquiror's right or ability to operate the businesses of any SPV shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Acquiror, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Acquiror's right or ability to operate the businesses of any SPV, or seeks to require Acquiror to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of any SPV and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Acquiror. 8.07 LOCKUP AGREEMENT. Each Transferor shall have executed and delivered to Acquiror the Lockup Agreement. 8.08 REGISTRATION RIGHTS AGREEMENT. Each Transferor shall have executed and delivered to Acquiror the Registration Rights Agreement. 8.09 UNDERWRITING AGREEMENT. The Underwriting Agreement shall have been executed and delivered by the parties thereto. 8.10 WAIVER AND CONTRIBUTION AGREEMENT. Each Transferor shall have executed and delivered to Acquiror a Waiver and Contribution Agreement. 8.11 NO ENCUMBRANCES OR INDEBTEDNESS. Each of the Vessels and all of the SPV Shares shall be delivered free and clear of all Encumbrances. Transferors shall have caused the repayment of all indebtedness of the SPVs or incurred by the Vessels other than the indebtedness set forth on Section 4.06(b)(2) of the Disclosure Schedule. -21- 8.12 TRANSFER OF VESSELS. Equili Company, L.P. shall have transferred the KENTUCKY Vessel to Genmar Kentucky Ltd. and Equili Company II, L.P. shall have transferred the WEST VIRGINIA Vessel to Genmar West Virginia, Ltd. in accordance with Section 7.07. 8.13 ESCROW AGREEMENT. Each Transferor, Acquiror and the Escrow Agent shall have executed and delivered the Escrow Agreement. 8.14 UPDATE OF SCHEDULES. Transferors shall have updated SCHEDULE 1 and relevant sections of the Disclosure Schedule to reflect the transfers of the KENTUCKY and WEST VIRGINIA Vessels in accordance with Section 7.07 and the results of the due diligence investigation conducted by Acquiror as contemplated by Section 7.12 in each case in a manner reasonably acceptable to Acquiror. 8.15 OTHER CLOSING MATTERS. Acquiror shall have received such other supporting information in confirmation of the representations, warranties, covenants and agreements of Transferor and the satisfaction of the conditions to Acquiror's obligation to close hereunder as Acquiror or its counsel may reasonably request. 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF TRANSFEROR. The obligations of the Transferors under Sections 2 and 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by the Transferors: 9.01 REPRESENTATIONS AND WARRANTIES. Each and every representation and warranty of Acquiror contained or provided in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 9.02 COMPLIANCE WITH COVENANTS. Acquiror shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 9.03 REGULATORY APPROVALS. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, shall have been obtained. 9.04 CONSENTS OF THIRD PARTIES. All consents from third parties necessary for the execution and delivery of this Agreement by Acquiror and the consummation of the transactions contemplated hereby shall have been obtained in writing. -22- 9.05 NO VIOLATION OF ORDERS. No preliminary or permanent injunction or other order issued by Governmental Body, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby shall be in effect. 9.06 REGISTRATION RIGHTS AGREEMENT. Acquiror shall have executed and delivered to the Transferors the Registration Rights Agreement. 9.07 UNDERWRITING AGREEMENT. The Underwriting Agreement shall have been executed and delivered by the parties thereto. 9.08 ESCROW AGREEMENT. Each Transferor, Acquiror and the Escrow Agent shall have executed and delivered the Escrow Agreement. 9.09 CLOSING OPINION. The Transferors shall have received the Closing Opinion. 10. TERMINATION OF AGREEMENT. 10.01 CONDITIONS FOR TERMINATION. This Agreement may be terminated as to the acquisition of any and all SPVs: (a) at any time prior to the Closing, by mutual consent of Acquiror and the Transferors; (b) by Acquiror or the Transferors if the Closing shall not have been consummated by July 15, 2001, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the Party seeking to terminate this Agreement; or (c) by Acquiror or the Transferors if the other fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching Party, provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 10.01(c) if it is also in material breach of any provision of this Agreement; provided that Acquiror, on the one hand, and the Transferors, on the other hand, may waive their right to terminate this Agreement as to the acquisition of one or more SPVs. 10.02 EFFECT OF TERMINATION. Upon the termination of this Agreement for any reason, Acquiror and the Transferors shall have no liability or further obligations arising out of this Agreement except for any liability resulting from a breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Section 121 shall survive any termination of this Agreement. -23- 11. REMEDIES. 11.01 SURVIVAL. The representations and warranties of the Transferors in Section 4.01, 4.02, 4.03, and 4.04 (each as modified by Section 7.08) and Acquiror in Sections 6.01, 6.02 and 6.03 shall survive the Closing for a period of eighteen months thereafter plus such additional amount of time required for the final resolution of any claim under Section 11.02 with respect to any such representation or warranty of which notice is given in writing during such initial eighteen-month period. All other representations and warranties of the Parties hereunder shall survive the Closing for a period of six months thereafter plus such additional amount of time required for the final resolution of any claim under Section 11.02 with respect to any such representation or warranty of which notice is given in writing during such initial six-month period. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely. 11.02 INDEMNIFICATION BY TRANSFERORS. (a) The Transferors hereby severally (provided that with respect to (i) Equili Company, L.P. and Equili Company, LLC hereby jointly and severally and (ii) Equili Company II, L.P. and Equili Company II, LLC, hereby jointly and severally) indemnify and hold harmless Acquiror, each SPV, and each of their respective directors, officers, employees, agents, and representatives, and their respective successors and assigns (all of the foregoing, the "Indemnified Parties") from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by any Transferor of any representation, warranty, or covenant made by any Transferor in this Agreement. (b) Except for a breach by a Transferor of any representation or warranty contained in Sections 4.01, 4.02, 4.03, or 4.04 (each as modified by Section 7.08), each Transferor's sole obligation and Acquiror's sole remedy with respect to indemnification by the Transferors for a breach of a representation or warranty under Section 11.02(a) shall be for Acquiror to have recourse to the Indemnity Shares, and Acquiror may instruct the Escrow Agent to return to Acquiror a number of Indemnity Shares equal to the amount of the applicable Loss divided by the IPO Price until such number of Indemnity Shares equals zero. Any fractional shares among such Indemnity Shares created as a result of such reduction shall be subject to Section 7 of the Plan of Recapitalization. (c) With respect to indemnification for a breach by a Transferor of any representation or warranty contained in Sections 4.01, 4.02, 4.03, or 4.04 (each as modified by Section 7.08), Acquiror's first remedy shall be recourse to the Indemnity Shares, and Acquiror may instruct the Escrow Agent to return Indemnity Shares to Acquiror in accordance with the first sentence of this Section 11.02(b). To the extent such return of Indemnity Shares does not fully offset the Loss, the Transferors shall satisfy the remainder of the Loss by returning to Acquiror a number of Acquiror Shares equal to the remainder of the Loss divided by the IPO Price until the Transferors have returned a number of shares equal to the number of Acquiror Shares issued to the Transferors. To the extent any Transferor and its affiliate transferees no longer own Acquiror Shares sufficient to satisfy its obligations under the preceding sentence, such Transferor shall pay to Acquiror the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall any -24- Transferor be required to return to Acquiror more than such Transferor's Transferor Shares (or the cash equivalent of such Acquiror Shares based on the IPO Price if such Transferor no longer owns such Transferor Shares). (d) Except as provided in Section 11.04, the remedies provided in this Section 11.02 are the exclusive remedy of Acquiror with respect to the representations, warranties, and covenants, and any other matters covered by this Agreement; provided, however, that nothing in this Section 11.02 shall prohibit Acquiror from seeking specific performance or injunctive relief against any Transferor in respect of a breach by such Transferor of any covenant hereunder; and further provided, that nothing in this Section 11.02 shall limit Acquiror's remedies for a breach of covenant occurring prior to the Closing. 11.03 INDEMNIFICATION BY ACQUIROR. (a) Acquiror shall indemnify and hold harmless each Transferor and each of its respective directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with a breach by Acquiror of any representation, warranty, or covenant made by Acquiror in this Agreement, in each case solely to the extent provided in Section 11.03(b). (b) Acquiror's sole obligation and each Transferor's sole remedy for a breach by Acquiror of a representation, warranty, or covenant hereunder shall be for Acquiror to pay such Transferor the amount of such Transferor's Loss in cash; provided that Acquiror's total obligations under this Section 11.03 shall in no event exceed the aggregate value of the SPV Shares minus any cash paid by Acquiror in respect of the SPVs. 11.04 INDEMNIFICATION WITH RESPECT TO THE ACTION. Each of Equili Company, L.P. and Equili Company II, L.P. hereby jointly and severally indemnifies and holds harmless the Indemnified Parties from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with the Action. Nothing contained in Section 11.02 shall limit Acquiror's remedies with respect to a breach of Section 7.09. 12. MISCELLANEOUS. 12.01 EXPENSES. Each Party shall pay all costs and expenses incurred by such Party in respect of the transactions contemplated hereby, including fees of brokers, finders, advisers, attorneys, and accountants. 12.02 LIST OF APPRAISALS. The Parties acknowledge that EXHIBIT F hereto lists the valuations described in the Plan of Reorganization obtained by Acquiror with respect to the Vessels and other motor tankers. 12.03 ENTIRETY OF AGREEMENT. This Agreement (including the Disclosure Schedule and all other Schedules, Annexes and Exhibits hereto), states the entire agreement of the Parties, merges all prior negotiations, agreements and understandings, if any, and states in full all -25- representations, warranties, covenants, and agreements which have induced this Agreement. No Party shall make any contrary representations in dealing with third parties. 12.04 NOTICES. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if and when delivered personally or by overnight courier to the Parties at the following addresses or sent by electronic transmission, with confirmation received, to the telecopy numbers specified below (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) If to Acquiror: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 With a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, NY 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) If to the Transferors: Wexford Capital LLC 411 West Putnam Avenue Greenwich, CT 06830 Attn: Mr. Frederick Simon Telecopy: (203) 862-7311 Confirm: (203) 862-7011 and Attn.: Mr. Arthur Amron Telecopy: (203) 862-7312 Confirm: (203) 862-7012 With a copy to: Reitler Brown, LLC 800 Third Avenue 21st Floor New York, NY 10022 Attn: Edward G. Reitler, Esq. Telecopy: (212) 371-5500 Confirm: (212) 371-2000 -26- 12.05 AMENDMENT. This Agreement may be modified or amended only by an instrument in writing, duly executed by the Parties. 12.06 WAIVER. No waiver by any Party of any term, provision, condition, covenant, agreement, representation, or warranty contained in this Agreement (or any breach thereof) shall be effective unless it is in writing executed by the Party against which such waiver is to be enforced. No waiver shall be deemed or construed as a further or continuing waiver of any such term, provision, condition, covenant, agreement, representation or warranty (or breach) on any other occasion or as a waiver of any other term, provision, condition, covenant, agreement, representation or warranty (or of the breach of any other term, provision, condition, covenant, agreement, representation or warranty) contained in this Agreement on the same or any other occasion. 12.07 ASSIGNMENT; BINDING NATURE; NO BENEFICIARIES. This Agreement may not be assigned by any Party without the prior written consent of the Parties; PROVIDED, however, that Acquiror may assign any of its rights hereunder (including the right to purchase one or more SPVs) to any affiliate of Acquiror which assumes the corresponding obligations of Acquiror hereunder, but no such assignment shall relieve Acquiror of any such obligations. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective heirs, personal representatives, legatees, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective heirs, personal representatives, legatees, successors and permitted assigns. 12.08 SEVERABILITY. If any provision of this Agreement is found unenforceable by a court of competent jurisdiction, such unenforceable provision shall not affect the other provisions but shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the Parties. 12.09 INTERPRETATION. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 12.10 GOVERNING LAW; JURISDICTION. (a) This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York applicable to contracts executed and fully performed within the State of New York. (b) Each Party submits to the non-exclusive jurisdiction of the state and federal courts of the United States located in the City of New York, Borough of Manhattan with respect to any claim or cause of action arising out of this Agreement or the transactions contemplated hereby. 12.11 NEGOTIATED AGREEMENT. Acquiror and the Transferors acknowledge that they have been advised and represented by counsel in the negotiation, execution and delivery of this Agreement and accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against any Party because such Party or its representatives drafted such provision. -27- 12.12 REMEDIES CUMULATIVE. The remedies provided for or permitted by this Agreement shall be cumulative and the exercise by any Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein. 12.13 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 12.14 EXECUTION AND DELIVERY. This Agreement may be executed in 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. This Agreement may be delivered by facsimile transmission with the same legal effect as if delivery of an original were made in person. [THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.] -28- IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement as a Deed as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos --------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer GENMAR ALEXANDRA, LLC By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: GENMAR II, LLC By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: EQUILI COMPANY, L.P. By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: EQUILI COMPANY, LLC By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: -29- EQUILI COMPANY II, L.P. By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: EQUILI COMPANY II, LLC By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: GENMAR AJAX, LLC for purposes of Section 5 only By: /s/ Peter C. Georgiopoulos --------------------------- Name: Peter C. Georgiopoulos Title: VALENTIS INVESTORS LLC for purposes of Section 5 only By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: WEXFORD TANKERS KENTUCKY LLC for purposes of Section 5 only By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: WEXFORD INVESTORS KENTUCKY LLC for purposes of Section 5 only By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: -30- WEXFORD TANKERS WEST VIRGINIA LLC for purposes of Section 5 only By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: WEXFORD INVESTORS WEST VIRGINIA LLC for purposes of Section 5 only By: /s/ Frederick Simon -------------------------- Name: Frederick Simon Title: -31- LIST OF SCHEDULES AND EXHIBITS* EXHIBITS: Exhibit A - Lock up Agreement Exhibit B - Registration Rights Agreement Exhibit C - Waiver and Contribution Agreement Exhibit D - Registration Statement Exhibit E - Legal Opinion Exhibit F - List of Appraisals SCHEDULES: Schedule 1 - List of Transferors, Vessels and SPVs Schedule 2 - Management Agreements * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. EX-2.10 12 a2050304zex-2_10.txt EXHIBIT 2.10 Exhibit 2.10 VESSEL CONTRIBUTION AGREEMENT by and between GENERAL MARITIME SHIP HOLDINGS LTD. as Purchaser and Blystad Shipholding Inc., Liberia as Seller May 25, 2001 VESSEL CONTRIBUTION AGREEMENT THIS VESSEL CONTRIBUTION AGREEMENT (this "Agreement") is dated as of May 25, 2001, and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), and Blystad Shipholding Inc., Liberia, a Liberian corporation, ("Seller"). Purchaser and Seller are sometimes referred to herein collectively as the "Parties" and each individually as a "Party." RECITALS A. Seller owns the motor tankers described in Exhibit C (the "Vessels"). B. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex I (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, including the Vessels, as further described in the Plan of Recapitalization. C. Seller desires to sell the Vessels to Purchaser, and Purchaser desires to acquire the Vessels from Seller, on the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties, intending legally to be bound, agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: 1.01 "Affiliate" means, with respect to a specified Person, any other Person which controls, is controlled by or is under common control with such specified Person. 1.02 "Agreement" means this Agreement and all Exhibits and Schedules annexed hereto, as the same may be amended, supplemented or modified from time to time. 1.03 "Closing" has the meaning assigned to it in Section 3.02. 1.04 "Closing Date" means the date on which a Vessel is delivered to Purchaser as set forth in the relevant MOA. 1.05 "Closing Documents" means the agreements, certificates, instruments, and other documents specified to be executed and/or delivered pursuant to a given MOA in connection with the sale of a Vessel thereunder. 1.06 "Escrow Agent" has the meaning ascribed thereto in the Plan of Recapitalization. 1.07 "Escrow Agreement" means the Escrow Agreement executed by Seller regarding the Purchaser Shares in the form of Exhibit A with such changes thereto as may be reasonably required by the Escrow Agent. 1.08 "Governmental Body" means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.09 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.10 "Laws" means all applicable provisions of all constitutions, treaties, statutes, laws (including, but not limited to, the common law), rules, regulations, ordinances, codes or orders of any Governmental Body and of all orders, decisions, injunctions, judgments, awards and decrees or consents of or agreements with any Governmental Body. 1.11 "Liens" means, with respect to any asset of any Person, any mortgage, lien, maritime lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. 1.12 "Lockup Agreement" means the Lockup Agreement executed by Seller regarding the Purchaser Shares in the form of Exhibit B. 1.13 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.14 "MOA" means a Memorandum of Agreement for the purchase of each Vessel in the form of Exhibit C together with any addenda thereto. 1.15 "Parties" has the meaning assigned to it in the preamble. 1.16 "Permitted Liens" means (a) any Lien for Taxes which are not yet due; (b) any carrier's, warehouseman's, mechanic's, materialman's, repairman's, landlord's, maritime, or similar statutory or inchoate lien incidental to the ordinary conduct of business which involves an obligation that is not past due. 1.17 "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, governmental body or authority or any other entity. 1.18 "Purchaser" has the meaning assigned to it in the preamble. - 2 - 1.19 "Purchaser Share" means a share of Purchaser Stock. 1.20 "Purchaser Stock" means the common stock of Purchaser, par value $.01 per share. 1.21 "Records" has the meaning assigned to it in Section 6. 1.22 "Registration Statement" means the Registration Statement of Purchaser on Form S-1 concerning the initial public offering of Purchaser Stock. 1.23 "Registration Rights Agreement" means the Registration Rights Agreement by and among Seller, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit D. 1.24 "Seller" has the meaning assigned to it in the preamble. 1.25 "Tax" or "Taxes" means taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any taxing authority of any Governmental Body, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.26 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser and the underwriters named therein in connection with the initial public offering of Purchaser. 1.27 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by Seller, substantially in the form of Exhibit E. 2. Purchase and Sale of Vessels 2.01 Purchase and Sale of Vessels. Subject to and upon the terms and conditions set forth in this Agreement, Seller agrees to sell, transfer, convey, assign and deliver to Purchaser, free and clear of all Liens, and Purchaser agrees to purchase and accept from Seller on the Closing Date, all of Seller's right, title and interest in and to the Vessels Seller owns in exchange for the consideration set forth in the applicable MOA. 2.02 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to Seller in consideration of the sale of the Vessels to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference. Upon the closing of the purchase of each Vessel, IPO-Co shall instruct the Escrow Agent to deliver a certificate evidencing the shares allocated to Seller in respect of each Vessel under Section 9(A)(i) of the Plan of Recapitalization to Seller; provided that 10% of such shares shall be placed in Seller's sub- - 3 - account of the Purchase Price Calculation Account (as defined in the Plan of Recapitalization) to be distributed in accordance with the Plan of Recapitalization. 2.03 Documents for Vessel Sales. The sale of each Vessel shall be pursuant to a MOA and the Closing Documents specified therein. Simultaneously with the execution hereof, Seller and Purchaser are executing and delivering to each other the relevant MOA. Additionally, simultaneously with the execution hereof, Seller shall execute and deliver to Purchaser the Lock-up Agreement. 2.04 Certain Additional Documents. Purchaser and Seller hereby agree to execute the Escrow Agreement and the Registration Rights Agreement at the Recapitalization Closing Time (as defined in the Plan of Recapitalization). 3. Closing 3.01 Closing. The consummation of the purchase and sale of each Vessel (a "Closing") shall be held on the Closing Date for such Vessel, effective at 5:00 p.m. Eastern Standard Time on the Closing Date, at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022. 3.02 Closing Deliveries. On the Closing Date, Seller shall execute and deliver to Purchaser the Waiver and Contribution Agreement and all other documents, agreements and instruments then required to be delivered by Seller pursuant to Section 3.03. Each Vessel shall be delivered as set forth in the relevant MOA that has been executed simultaneously herewith, and the Closing Documents specified to be executed and/or delivered by Purchaser or Seller under such MOA shall be delivered concurrently with the delivery of the Vessel. 3.03 Further Assurances. At and from time to time following the Closing, Seller shall deliver to Purchaser such other instruments of conveyance and transfer as Purchaser may reasonably request or as may be otherwise necessary to more effectively convey and transfer to, and vest in Purchaser and put Purchaser in full possession of, the Vessels free and clear of all debts, Taxes, claims, options, liabilities, obligations and Liens, whether matured or unmatured. 4. Seller's Representations and Warranties. Seller represents and warrants to Purchaser as follows: 4.01 Organization and Qualification; Ownership. Seller is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of formation. 4.02 Authorization. Seller has all requisite power and authority to execute and deliver this Agreement, each MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. Seller has duly authorized the execution, delivery and performance of this Agreement, each MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto. This Agreement, each MOA, and each Closing Document that Seller has executed and delivered or is to execute and deliver pursuant thereto has been or will be duly executed and delivered by Seller and (assuming due authorization, execution and delivery by the Purchaser) constitutes or, upon execution and delivery thereof, will constitute the - 4 - legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws of general applicability affecting the rights of creditors and by general equitable principles. 4.03 No Violations or Conflicts. The execution, delivery and performance by Seller of this Agreement, each MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto, and the consummation by Seller of the transactions contemplated hereby (and thereby) do not and will not (with the giving of notice or the passage of time or both) (a) violate any provision of Seller's governing documents, (b) result in a violation or breach of, or constitute a default or an event of default under, any indenture, mortgage, bond, contract, agreement, instrument or other obligation to which Seller or by which any of its assets are bound, which would be reasonably likely to adversely affect the ability of Seller to consummate the transactions contemplated hereunder, (c) violate any Law, writ, judgment, injunction, court decree, license or permit to which Seller or any of its assets is subject, or (d) otherwise result in the creation of any Lien on any Vessel. 4.04 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or any other Person is required to be made or obtained by Seller in connection with the execution, delivery and performance of this Agreement, each MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto, other than those disclosed on Schedule 4.04 which have been obtained. 4.05 Ownership of Vessels. Seller is the sole owner of the Vessels. 4.06 Condition of Vessels. The Vessels are each in good condition, working order and repair, are each classed by Det Norske Veritas or another classification society which is a member of the International Association of Classification Societies with respect to hull and machinery in the highest classification and rating for vessels of similar age, size and description, and are in such condition to merit such classification and rating as of the Closing. 4.07 No Encumbrances. No Vessel owned by Seller will be subject to any mortgage, lien, pledge, time or demise charter or other encumbrance at the time such Vessel is conveyed by the Applicable Seller to Purchaser pursuant to this Agreement. 4.08 Insurance. Each Vessel is duly insured in accordance with customary and mandatory requirements for vessels of similar age, size and description with respect to hull and machinery, protection and indemnity, war risks, and pollution protection, and shall continue to be so insured by Seller until such Vessel is conveyed by Seller to Purchaser pursuant to this Agreement. 4.09 Litigation. There are no actions, suits or proceedings (in litigation, arbitration or otherwise) pending or threatened against or affecting any Vessel, Seller, or its respective properties, at law, in equity or in admiralty, before any court or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or other instrumentality, domestic or foreign, which may, if adversely determined, result in the imposition - 5 - of a Lien on such Vessel or which would be reasonably likely to adversely affect the ability of Seller to consummate the transactions contemplated hereunder. 4.10 Brokers and Finders. Other than M.J. Gruber & Co., Ltd. and Ness, Risan and Partners AS, the fees of which shall be Seller's sole responsibility, no broker or finder has acted for Seller in connection with this Agreement or the transactions contemplated hereunder and no broker or finder retained by Seller is entitled to any brokerage or finder's fee with respect to this Agreement or such transactions. 4.11 Investment Purpose; Private Placement. (a) Seller has had a full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by Seller have been made available to Seller and the persons that Seller has retained to advise it with respect to such an acquisition, and that Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (b) Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law or with any intention of participating in the formulation, determination, or direction of the basic business decisions of Purchaser. (c) Seller acknowledges that the Purchaser Shares are not registered under the Securities Act of 1933, as amended (the "Securities Act") or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (d) Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. (e) Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (f) Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax and other economic considerations of an investment in the Purchaser Shares. Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in - 6 - the Purchaser Shares. Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Section 5 or on any representations of any officer, director, employee, founder or agent of Purchaser. (g) Seller hereby certifies that it is not a U.S. person (as defined under the Securities Act and Regulation S, Rules 901 through 905 promulgated pursuant to the Securities Act ("Regulation S")) and is not acquiring the Purchaser Shares for the account or benefit of any U.S. person. 4.12 Registration Statement Information. Seller has received and reviewed the Registration Statement. All information concerning Seller in the Registration Statement is complete and correct. Any information provided by Seller for inclusion in the Registration Statement after the date of this Agreement will be complete and correct. 5. Purchaser's Representations and Warranties. Purchaser represents and warrants to Seller as follows: 5.01 Organization and Qualification. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 5.02 Authorization. Purchaser has all requisite power and authority to execute and deliver this Agreement, each MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. Purchaser has duly authorized the execution, delivery and performance of this Agreement, each MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto by all necessary corporate action. Each of this Agreement, each MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto (assuming due authorization, execution and delivery by Seller) constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws of general applicability affecting the rights of creditors and by general equitable principles. 5.03 No Violations or Conflicts. The execution, delivery and performance by Purchaser of this Agreement, each MOA, and each Closing Document Purchaser is to execute and deliver pursuant thereto, and the consummation by Purchaser of the transactions contemplated hereby and thereby does not and will not (with the giving of notice or the passage of time or both) (i) violate any provision of Purchaser's governing documents, (ii) result in a violation or breach of, or constitute a default or an event of default under, any indenture, mortgage, bond, contract, license, agreement, permit, instrument or other obligation to which Purchaser is a party or by which any of its assets is bound, or (iii) violate any Law, writ, judgment, injunction or court decree to which Purchaser is subject. - 7 - 5.04 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or any other Person is required to be made or obtained by Purchaser in connection with its execution, delivery and performance of this Agreement, each MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto. 5.05 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable. 5.06 Brokers and Finders. No broker or finder has acted for Purchaser in connection with this Agreement or the transactions contemplated hereunder and no broker or finder retained by Purchaser is entitled to any brokerage or finder's fee with respect to this Agreement or such transactions. 6. Covenants. 6.01 Vessels. From the date hereof until the Closing, Seller will not do any of the following without the prior written consent of Purchaser: (a) operate the Vessels other than in the ordinary course of its business; (b) except as expressly permitted in this Section 6, sell, transfer, lease (other than single voyage charters to customers in the ordinary course) to others or otherwise dispose of the Vessels; (c) enter into any commitment to do any of the foregoing. 6.02 No Solicitation of Alternative Transaction. Seller shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of any Vessel by any means, directly or indirectly, including any acquisition of Seller itself (collectively, "Acquisition Proposals") until June 30, 2001. Seller shall promptly inform Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) of which it may become aware in respect of an Acquisition Proposal and furnish to Purchaser a copy of any such written inquiry. 6.03 Securities. (a) Seller agrees that it shall resell the Purchaser Shares only in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration; and agrees that it shall not engage in hedging transactions with regard to the Purchaser Shares unless in compliance with the Securities Act. (b) Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend: - 8 - "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT." (c) Purchaser shall refuse to register any transfer of any Purchaser Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration. (d) Seller acknowledges and agrees that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with the legend set forth in Section 6.03(b). 7. Indemnification. 7.01 Survival. All representations and warranties of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith shall survive the Closing Date for two years beginning on the Closing Date. 7.02 Indemnification by Seller. Seller shall indemnify and hold harmless Purchaser and its directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with any breach by Seller of any representation, warranty, covenant or other agreement of Seller contained herein or in any MOA or Closing Document. Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by Seller for a breach of any representation, warranty, covenant or other agreement shall be for Seller to satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to Seller. To the extent Seller and its affiliate transferees no longer own Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall Seller be required to return to Purchaser more than the number of Purchaser Shares issued to Seller hereunder (or the cash equivalent of such Purchaser Shares based on the IPO Price if Seller and its affiliate transferees no longer own such Purchaser Shares). 7.03 Indemnification by Purchaser. The Purchaser shall indemnify and hold harmless Seller and its directors, officers, employees, agents, and representatives from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with any - 9 - breach by such Purchaser of any representation, warranty, covenant or other agreement of such Purchaser contained herein or in any MOA or Closing Document. Purchaser's sole obligation and Seller's sole remedy for a breach by Purchaser of such a representation, warranty, or covenant hereunder shall be for Purchaser to pay Seller the amount of Seller's Loss in cash; provided that Purchaser's total obligations under this Section 7.02 shall in no event exceed the Appraised Value (as defined in the Plan of Recapitalization) of the Vessels minus any Indebtedness (as defined in the Plan of Recapitalization) repaid or to be repaid by Purchaser in connection with the acquisition of the Vessels and any other cash paid to Seller in respect of the Vessels at the closing of the Vessels. 8. Conditions Precedent to Obligations of Purchaser. The obligations of Purchaser under Sections 2 and 3 and each MOA or Closing Document shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser. Without limiting the generality of the foregoing and without prejudice to any remedies of Purchaser at law, in equity, hereunder, or otherwise, Purchaser may waive any of the following conditions as to one Vessel only and proceed with the acquisition of such Vessel but not the other. 8.01 Representations and Warranties. Each and every representation and warranty of Seller contained in this Agreement, any Schedule, such MOA, the Closing Documents called for thereunder, or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 8.02 Compliance with Covenants. Seller shall have performed and observed in all material respects all covenants and agreements to be performed or observed by Seller under this Agreement, such MOA, and the Closing Documents called for thereunder at or before the Closing 8.03 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, such MOA, and the Closing Documents called for thereunder shall have been obtained. 8.04 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement, such MOA, and the Closing Documents called for thereunder by Seller and the consummation of the transactions contemplated hereby and thereby shall have been obtained in writing. 8.05 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement, such MOA, or the Closing Documents called for thereunder invalid or unenforceable - 10 - in any material respect or that prevents the consummation of the transactions contemplated hereby or thereby or which imposes restrictions on Purchaser's right or ability to operate any Vessel shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement, such MOA, or the Closing Documents called for thereunder or which challenges the validity or enforceability of this Agreement, such MOA, or the Closing Documents called for thereunder or which seeks to impose restrictions on Purchaser's right or ability to operate any Vessel, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to any Vessel and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 8.06 MOAs. As to each MOA, Seller shall have (a) executed and delivered to Purchaser such MOA, (b) executed and/or delivered, as applicable, all Closing Documents called for to be executed and/or delivered by Seller under such MOA, and (c) satisfied all conditions precedent set forth in such MOA. Purchaser shall not have terminated any MOA in accordance with the terms thereof, including termination of such MOA due to the actual, constructive, or compromised total loss of such Vessel before delivery. 8.07 Lockup Agreement. Seller shall have executed and delivered the Lockup Agreement. 8.08 Registration Rights Agreement. Seller shall have executed and delivered to Purchaser the Registration Rights Agreement. 8.09 Completion of IPO. The initial public offering of Purchaser Stock shall have closed. 8.10 Waiver and Contribution Agreement. Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. 8.11 Other Closing Matters. Purchaser shall have received such other supporting information in confirmation of the representations, warranties, covenants and agreements of Seller and the satisfaction of the conditions to Purchaser's obligation to close hereunder as Purchaser or its counsel may reasonably request. 9. Conditions Precedent to Obligations of each Seller. The obligations of Seller under Sections 2 and 3 and each MOA or Closing Document shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by such Seller: 9.01 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule, such MOA, the Closing Documents called for thereunder, or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true - 11 - and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 9.02 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement, such MOA, and the Closing Documents called for thereunder at or before the Closing. 9.03 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, such MOA, and the Closing Documents called for thereunder shall have been obtained. 9.04 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement, such MOA, and the Closing Documents called for thereunder by Purchaser and the consummation of the transactions contemplated hereby shall have been obtained in writing. 9.05 No Violation of Orders. No preliminary or permanent injunction or other order issued by Governmental Body, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement, such MOA, or the Closing Documents called for thereunder invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or thereby shall be in effect. 9.06 MOAs. As to each MOA, Purchaser shall have (a) executed and delivered to Seller such MOA, (b) executed and/or delivered, as applicable, all Closing Documents called for to be executed and/or delivered by Purchaser under such MOA, and (c) satisfied all conditions precedent set forth in such MOA. 9.07 Registration Rights Agreement. Purchaser shall have executed and delivered to Seller the Registration Rights Agreement. 9.08 Underwriting Agreement. The Underwriting Agreement shall have been executed and delivered by the parties thereto. 9.09 Other Closing Matters. Seller shall have received such other supporting information in confirmation of the representations, warranties, covenants and agreements of Purchaser and the satisfaction of the conditions to Seller's obligations to close hereunder as Seller or its counsel may reasonably request. 10. Termination of Agreement. 10.01 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and Seller; - 12 - (b) by Purchaser or Seller (i) if the IPO does not occur on or before June 15, 2001 or (ii) if the Closing shall not have been consummated with respect to such Vessel by one hundred eighty (180) days after the date hereof, unless such failure of occurrence or consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the party or parties seeking to terminate this Agreement; or (c) by Purchaser or Seller if the other party fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching party, provided, however, that Purchaser or such Seller shall not be entitled to terminate this Agreement pursuant to this Section 10.01(c) if it is also in material breach of any provision of this Agreement. 10.02 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and Seller shall have no liability or further obligations arising out of this Agreement to each other except for any liability resulting from an intentional breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Section 11 shall survive any termination of this Agreement. 11. General Provisions 11.01 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof" and "herein" refer to this Agreement. (b) "Including" means including, without limitation, whether or not so expressed. (c) References to Sections, Exhibits, and Schedules mean, respectively, Sections, Exhibits, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. 11.02 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be (i) sent by registered or certified mail, return receipt requested, (ii) hand delivered or (iii) sent by prepaid overnight carrier, with a record of receipt, to the Parties at the following addresses (or at such other addresses as shall be specified by the Parties by like notice): (a) if to Purchaser: - 13 - c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5603 Confirm: (212) 763-5600 with copies to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, New York 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) if to the Seller: Blystad Shipholding Inc., Liberia One Gorham Island Westport, CT 06880 Telecopy: (203) 341-3630 Confirm: (203) 341-3636 with a copy to: ______________________ ______________________ ______________________ ______________________ [others] Each notice or communication shall be deemed to have been given on the date received. 11.03 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 11.04 Entire Agreement. This Agreement, together with each MOA and the Closing Documents, constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the Parties, with respect to the subject matter hereof. 11.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns and is not intended to confer upon any other Person (including, without limitation, any directors, officers, employees, independent contractors, agents or representatives of Seller), any rights or remedies hereunder. - 14 - 11.06 Governing Law. This Agreement shall be governed, including, without limitation, as to validity, interpretation and effect, by the internal laws of the State of New York, without regard to the principles of conflicts of laws. 11.07 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute a single agreement. Signed facsimile copies of this Agreement will legally bind the Parties to the same extent as original documents. 11.08 FORUM SELECTION AND CONSENT TO JURISDICTION. Any litigation based hereon, or arising out of, under or in connection with, this Agreement or the transactions contemplated hereby may be (but shall not be required to be) brought and maintained in the courts of the State of New York or in the United States District Court for the Southern District of New York. The Parties hereby expressly and irrevocably submit to the jurisdiction of the courts of the State of New York and of the United States District Court for the Southern District of New York for the purpose of any such litigation as set forth above and irrevocably agree to be bound by any judgment rendered thereby in connection with such litigation. The Parties further irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of New York. Each of the Parties hereby expressly and irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter may have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in an inconvenient forum. 11.09 Agent for Service of Process. Seller hereby irrevocably designates Blystad Shipping (USA) Inc., One Gorham Island, Westport, CT 06880, as its agent for service of process in connection with this Agreement. 11.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either Party without the prior written consent of the other Party; provided, however, that Purchaser may assign any of its rights hereunder (including the right to purchase one or more Vessels) to any affiliate of Purchaser which assumes the corresponding obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations. Neither Party shall be relieved of any liability arising hereunder in respect of any assignment pursuant to this Section, unless such assignor has received a written release expressly excepting such assignor from any liability that may arise hereunder. 11.11 Waiver; Amendment. No waiver of any term, condition or obligation of this Agreement shall be valid unless in writing and signed by the waiving party. No failure or delay by either Party at any time to require the other Party to perform strictly in accordance with the terms hereof shall preclude such Party from requiring performance by the other Party at any later time. No waiver of any one or several of the terms, conditions or obligations of this Agreement, and no partial waiver thereof, shall be construed as a waiver of any of the other terms, conditions or obligations of this Agreement. This Agreement may not be amended, changed or modified in any fashion except by written instrument signed by each of the Parties. - 15 - 11.12 Fees and Expenses. Except as otherwise expressly set forth herein, all fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such fees, costs or expenses. Seller shall bear and pay all Taxes that arise out of or as a result of the consummation of this Agreement and each MOA. 11.13 No Third Party Beneficiary Rights. No provisions of this Agreement are intended, nor will be interpreted, to provide or create any third party beneficiary rights or other rights of any kind in any client, customer, affiliate, stockholder or partner of either Party or any other Person unless specifically provided otherwise herein, and, except as so provided, all provisions hereof will be personal solely between the Parties. 11.14 Negotiated Agreement. The Parties acknowledge that each of them has been advised and represented by counsel in the negotiation, execution and delivery of this Agreement and accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against a Party because such Party or its representatives drafted such provision. 11.15 Public Announcements. Neither Party shall make any press release or public announcement concerning this Agreement or the transactions contemplated hereby without the prior written approval of the other party. 11.16 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative, and the exercise by either Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein, under applicable Laws, at equity, or otherwise. 11.17 Severability. Subject to the specific provisions of Section 8, if any provision of this Agreement shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as to such jurisdiction only as if any such invalid or unenforceable provision were not contained herein. 11.18 JURY TRIAL WAIVER. Each of the Parties hereby irrevocably waives all right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or the transactions contemplated hereby. [Signature page follows.] - 16 - IN WITNESS WHEREOF, each Party hereto has duly executed this Agreement as of the date first above written. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos -------------------------- Name: Peter C. Georgiopoulos Title: Vice President Blystad Shipholding Inc., Liberia By: /s/ Erik Ostbye -------------------------- Name: Erik Ostbye Title: VP, FINANCE/SECRETARY - 17 - LIST OF ANNEXES AND EXHIBITS* ANNEXES: Annex I--Plan of Recapitalization EXHIBITS: Exhibit A--Escrow Agreement Exhibit B--Lockup Agreement Exhibit C--Memorandum of Agreement Exhibit D--Registration Rights Agreement Exhibit E--Waiver and Contribution Agreement Exhibit F--Charter * Omitted Annexes and Exhibits will be furnished supplementally to the Commission upon request. EX-2.11 13 a2050304zex-2_11.txt EXHIBIT 2.11 ---------------------------------------------- Norwegian Shipbrokers' Association's Memo- randum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956. Code-name SALEFORM 1993 Revised 1966, 1983 and 1986/87 ---------------------------------------------- MEMORANDUM OF AGREEMENT Dated: April 26, 2001 Blystad Shipholding Inc, Liberia hereinafter called the Sellers, have agreed to sell, and General Maritime Ship Holdings Ltd. a Marshall Islands Corporation (to be renamed General Maritime Corporation hereinafter called the Buyers, have agreed to buy Name: MT Anja Classification Society/Class: Lloyds Register Built: 1990 By: Imabari, Japan Flag: Liberia Place of Registration: Monrovia Call Sign: ELYP2 Grt/Nrt: 52, 594 GRT Register Number: 8902773 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" mean the Society referred to in line 4. "Shares" to mean shares of common stock of the Buyers. 1. Purchase Price Repayment of indebtedness of the Vessel of USD18,000,000 ("Debt") and a number of shares as determined under Section 2.02 of the Master Vessel Contribution Agreement between Buyers and Sellers to which this Memorandum of Agreement is attached (the "Master Vessel Contribution Agreement"), using USD 26,500,000 as the appraised value of the vessel (the "Appraised Value"). 2. Deposit As security for the correct fulfilment of this Agreement, the Buyers shall pay a deposit of 10% (ten per cent) of the Appraised Value in cash within 3 (three) banking days from the date of this Agreement being signed by fax and all subjects lifted, whichever is later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, if any, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in full in cash free of bank charges in the amount of the Debt to Sellers account at Christiania Bank New York and the balance to be paid in shares in exchange for the delivery documents required by Buyers. Payment method is described in the Master Vessel Contribution Agreement. on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. Notice of Readiness has been given in accordance with Clause 5. The day on which the Notice of Readiness is given shall not be included for the purpose of counting the number of days in the preceding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Portland Maine during February 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the buyers well informed of the Vessel's itinerary and shall provide the Buyers with 20, 10, 7, and 5 days approximate notice of the estimated time of arrival at the intended place of underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over charterfree safely afloat at a safe and accessible berth or anchorage in the range of Med not East of Greece, UK/Cont, USG, Caribs, USAC, EC Canada, WC Canada, USWC including Hawaii, Singapore-Japan range excluding North Korea and Vietnam. in the Sellers option. Expected time of delivery: June 1 to July 31 2001. Intention is to deliver the vessel at the first discharge port after the Buyers IPO is completed. Date of cancelling (see Clauses 5c), 6b), (iii) and 14): July 31th, 2001 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling his Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in clause 5a) and 5c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall released immediately to the Buyers whereafter this agreement shall be null and void. 6. Drydocking/Divers Inspection a)** b)** (i) The Vessel is to be delivered without dry docking. However, the Buyers shall have the right at their expense to arrange for an underwater inspection by a diver approved by the Classification Society prior to the delivery of the Vessel. The Sellers shall at their cost make the Vessel available for such inspection. The extent of the inspection and the conditions under which it is performed shall be to the satisfaction of the Classification Society. If the conditions at the port of delivery are unsuitable for such inspection, the Sellers shall make the Vessel available at a suitable alternative place near to the delivery port. (ii) If the rudder, propeller, bottom, other underwater parts below the deepest load Line are found broken, damaged or defective so as to affect the Vessel's class, then unless repairs can be carried out to the satisfaction of the Classification Society, the Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by the Classification Society of the Vessel's underwater parts below the deepest load line, the extent of the inspection being in accordance with the Classification Society's rules. If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken, damaged or defective so as to affect the Vessel's class such defects shall be made good by the Sellers at their expense to the satisfaction of the Classification Society without condition/recommendation*. In such event the Seller's are to pay for the cost of the underwater inspection and the Classification Society's attendance. (iii) If the Vessel is to be drydocked pursuant to Clause 6 b) (ii) and no suitable drydocking facilities are available at the port of delivery, the Sellers shall take the Vessel to a port where suitable drydocking facilities are available, whether within or outside the delivery range as per Clause 5b). Once drydocking has taken place the Sellers shall deliver the Vessel at a port within the delivery range as per Clause 5b) which shall, for the purpose of this Clause, become the new port of delivery. In such event the cancelling date provided or in Clause 5 b) shall be extended by the additional time required for the drydocking and extra steaming, but limited to a maximum of 14 running days. c) If the Vessel is drydocked pursuant to Clause 6 a) or 6 b) above (i) the Classification Society may require survey of the tailshaft system, the extent of the survey being to the satisfaction of the Classification surveyor. If such survey is not required by the Classification Society, the Buyers shall have the right to require the tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey being in accordance with the Classification Society's rules for tailshaft survey and consistent with the current stage of the Vessel's survey cycle. The Buyers shall declare whether they require the tailshaft to be drawn and surveyed not later than by the completion of the inspection by the Classification Society. The drawing and refitting of the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be condemned or found This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. defective so as to affect the Vessel's class, those parts shall be renewed or made good at the Sellers' expense to the satisfaction of the Classification Society without condition/recommendation*. (ii) the expenses relating to the survey of the tailshaft system shall be borne by the Buyers unless the Classification Society requires such survey to be carried out, in which case the Sellers shall pay these expenses. The Sellers shall also pay the expenses if the Buyers require the survey and parts of the system are condemned or found defective or broken so as to affect the Vessel's class*. (iii) the expense in connection with putting the Vessel in and taking her out of drydock, including the drydock dues and the Classification Society's fees shall be paid by the Sellers if the Classification Society issues any condition/recommendation* as a result of the survey or if it requires survey of the tailshaft system. In all other cases the Buyers shall pay the aforesaid expenses, dues and fees. (iv) the Buyer's representative shall have the right to be present in the drydock, but without interfering with the work or decisions of the Classification surveyor. (v) the Buyers shall have the right to have the underwater parts of the Vessel cleaned and painted at their risk and expense without interfering with the Sellers' or the Classification surveyor's work, if any, and without affecting the Vessel's timely delivery. If, however, the Buyers' work in drydock is still in progress when the Sellers have completed the work which the Sellers are required to do, the additional docking time needed to complete the Buyers' work shall be for the Buyers' risk and expense. In the event that the Buyers'work requires such additional time, the Sellers may upon completion of the Seller's work tender Notice of Readiness for delivery whilst the Vessel is still in drydock and the Buyers shall be obliged to take delivery in accordance with Clause 3, whether the Vessel is in drydock or not and irrespective of Clause 5 b). * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. ** 6 a) and 6 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 6 a) to apply. 7. Spares/bunkers etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shafts(s) and spare propeller(s)/propeller blades(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take, ashore crockery, plate, cutlery, linen, and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): The Buyers shall take over remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums and pay the sellers net purchase price including discounts This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in cash in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents as provided in clause 3 above. 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 19 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery - See clause 17. The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, (continued in clause 17) * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Money not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, they shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged and subject lifted, the This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. Buyers have a right to place two representatives on board the Vessel at their sole risk and expense upon arrival at a port to be agreed on or about a time to be agreed. These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* b)* This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code and the Law of the State of New York and should any dispute arise out of this Agreement, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for purpose of enforcing any award, this Agreement may be made a rule of the Court. The proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc. New York. c)* * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17 to 19 attached hereto are to form an integral part of this agreement. 17. The class and national and/international trading certificates including SOLAS, IMS and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. The Vessel will be in such condition that neither the port state nor flag state authorities at the port where the Vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. 18. This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value USD.01 per share not later than June 15, 2001. 19. Attached is Schedule of Closing Documents (two pages). This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between [ILLEGIBLE] document and this document. SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: 1) Bill of Sale (two executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by Marshall Islands law. 2) Commercial Invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants 3) Bunker Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the Shareholders certified by the corporate Secretary. The Secretary's certificate attaching the Board of Directors resolutions will be authenticated by a notary public (i) approving and/or ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's officers or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding the sale. 5) Power of Attorney acknowledged before a Notary Public. 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than three (3) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations affecting Class. 8) Certificate of Corporate Good Standing of the Seller. 9) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 10) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the closing date confirming the vessel is free of recorded mortgages, liens or other encumbrances. 11) Seller's confirmation that, to the best of its knowledge the Vessel: (i) has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) is not blacklisted by the United States of America or any government, state, country or political sub-division thereof. 12) Protocol of Delivery and Acceptance. 13) Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery in the name of Seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and duly acknowledged by a Notary Public. (i) Approving and/ or ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery, (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorizing an Officer or any attorney-in-fact to document the Vessel under the laws of the Republic of the Marshall Islands. 2) Power of Attorney duly acknowledged before a Notary Public. 3) Instructions to the Seller's bank authorizing the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90 % purchase price and (ii) bunkers and lubricants. For the Buyers: For the Sellers: General Maritime Ship Holding Ltd. Blystad Shipholding Inc., Liberia By: /s/ Peter C. Georgiopoulos By: /s/ Erik Ostbye -------------------------------- ---------------------------- Name: Peter C. Georgiopoulos Name: Erik Ostbye Title: Vice President Title: VP, Finance/Secretary EX-2.12 14 a2050304zex-2_12.txt EXHIBIT 2.12 Exhibit 2.12 ---------------------------------------------- Norwegian Shipbrokers' Association's Memo- randum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956. Code-name SALEFORM 1993 Revised 1966, 1983 and 1986/87. ---------------------------------------------- MEMORANDUM OF AGREEMENT Dated: April 26, 2001 Blystad Shipholding Inc., Liberia hereinafter called the Sellers, have agreed to sell, and General Maritime Ship Holdings Ltd. a Marshall Islands Corporation (to be renamed General Maritime Corporation hereinafter called the Buyers, have agreed to buy Name: MT Anella Classification Society/Class: Det Norske Veritas Built: 1991 By: Koyo, Japan Flag: Liberia Place of Registration: Monrovia Call Sign: ELYO9 Grt/Nrt: 52, 664 GRT Register Number: 17363 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" mean the Society referred to in Line 4. "Shares" to mean shares of common stock of the Buyers. 1. Purchase Price Repayment of indebtedness of the Vessel of USD18,000,000 ("Debt") and a number of shares as determined under Section 2.02 of the Master Vessel Contribution Agreement between Buyers and Sellers to which this Memorandum of Agreement is attached (the "Master Vessel Contribution Agreement"), using USD27,500,000 as the appraised value of the vessel (the "Appraised Value"). 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10% (ten per cent) of the Appraised Value in cash within 3 (three) banking days from the date of this Agreement being signed by fax and all subjects lifted, whichever is later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, if any, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in full in cash free of bank charges in the amount of the Debt to Sellers account at Christiania Bank New York and the balance to be paid in shares in exchange for the delivery documents required by Buyers. Payment method is described in the Master Vessel Contribution Agreement. on delivery of the vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the Original document and this document. Notice of Readiness has been given in accordance with Clause 5. The day on which the Notice of Readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in San Francisco on May 1, 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the buyers well informed of the Vessel's itinerary and shall provide the Buyers with 20, 10, 7, and 5 days approximate notice of the estimated time of arrival at the intended place of underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over charterfree safely afloat at a safe and accessible berth or anchorage in the range of Med not east of Greece, UK/Cont, USG, Caribs, USAC, EC Canada, WC Canada, USWC including Hawaii, Singapore-Japan range excluding North Korea and Vietnam. in the Sellers option. Expected time of delivery: June 1 to July 31 2001. Intention is to deliver the vessel at the first discharge port after the Buyers IPO is completed. Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): July 31, 2001 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection b)** (i) The Vessel is to be delivered without drydocking. However the Buyers shall have the right at their expense to arrange for an underwater inspection by a diver approved by the Classification Society prior to the delivery of the Vessel. The Sellers shall at their cost make the Vessel available for such inspection. The extent of the inspection and the conditions under which it is performed shall be to the satisfaction of the Classification Society. If the conditions at the port of delivery are unsuitable for such inspection, the Sellers shall make the Vessel available at a suitable alternative place near to the delivery port. (ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken, damaged or defective so as to affect the Vessel's class, then unless repairs can be carried out afloat to the satisfaction of the Classification Society, the Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by the Classification Society of the Vessel's underwater parts below the deepest load line, the extent of the inspection being in accordance with the Classification Society's rules. If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken, damaged or defective so as to affect the Vessel's class, such defects shall be made good by the Sellers at their expense to the satisfaction of the Classification Society without condition/recommendation*. In such event the Sellers are to pay also for the cost of the underwater inspection and the Classification Society's attendance. (iii) If the Vessel is to be drydocked pursuant to Clause 6 b) (ii) and no suitable drydocking facilities are available at the port of delivery, the Sellers shall take the Vessel to a port where suitable drydocking facilities are available, whether within or outside the delivery range as per Clause 5b). Once drydocking has taken place Sellers shall deliver the Vessel at a port within the delivery range as per Clause 5 b) which shall, for the purpose of this Clause, become the new port of delivery. In such event the cancelling date provided or in Clause 5 b) shall be extended by the additional time required for the drydocking and extra steaming, but limited to a maximum of 14 running days. c) If the Vessel is drydocked pursuant to Clause 6 a) or 6 b) above (i) the Classification Society may require survey of the tailshaft system, the extent of the survey being to the satisfaction of the Classification surveyor. If such survey is not required by the Classification Society, the Buyers shall have the right to require the tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey being in accordance with the Classification Society's rules for tailshaft survey and consistent with the current stage of the Vessel's survey cycle. The Buyers shall declare whether they require the tailshaft to be drawn and surveyed not later than by the completion of the inspection by the Classification Society. The drawing and refitting of the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be condemned or found This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. defective so as to affect the Vessel's class, those parts shall be renewed or made good at the Sellers' expense to the satisfaction of the Classification Society without condition/recommendation*. (ii) the expenses relating to the survey of the tailshaft system shall be borne by the Buyers unless the Classification Society requires such survey to be carried out, in which case the Sellers shall pay these expenses. The Sellers shall also pay the expenses if the Buyers require the survey and parts of the system are condemned or found defective or broken so as to affect the Vessel's class*. (iii) the expenses in connection with putting the Vessel in and taking her out of drydock, including the drydock dues and the Classification Society's fees shall be paid by the Sellers if the Classification Society issues any condition/recommendation* as a result of the survey or if it requires survey of the tailshaft system. In all other cases the Buyers shall pay the aforesaid expenses, dues and fees. (iv) the Buyers' representative shall have the right to be present in the drydock, but without interfering with the work or decisions of the Classification surveyor. (v) the Buyers shall have the right to have the underwater parts of the Vessel cleaned and painted at their risk and expense without interfering with the Sellers' or the Classification surveyor's work, if any, and without affecting the Vessel's timely delivery. If, however, the Buyers' work in drydock is still in progress when the Sellers have completed the work which the Sellers are required to do, the additional docking time needed to complete the Buyers' work shall be for the Buyers' risk and expense. In the event that the Buyers' work requires such additional time, the Sellers may upon completion of the Sellers' work tender Notice of Readiness for delivery whilst the Vessel is still in drydock and the Buyers shall be obliged to take delivery in accordance with Clause 3, whether the Vessel is in drydock or not and irrespective of Clause 5 b). * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition / recommendation are not to be taken into account. ** 6 a) and 6 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 6 a) to apply. 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on Shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether or board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plate, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): The Buyers shall take over remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums and pay the sellers net purchase price including discounts This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in cash in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents as provided in clause 3 above. 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 19 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery - See clause 17. The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, (continued in clause 17) * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this agreement has been signed by both parties and the deposit has been lodged and subject lifted, the This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at a port to be agreed on or about a time to be agreed These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* b)* This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code and Law of the State of New York and should any dispute arise out of this Agreement, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for purpose of enforcing any award, this Agreement may be made a rule of the Court. The proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc. New York. c)* * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17 to 19 attached hereto are to form an integral part of this agreement. 17. The class and national and /international trading certificates including SOLAS, IMS and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. The Vessel will be in such condition that neither the port state nor flag state authorities at the port where the Vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. 18. This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value USD.01 per share not later than June 15, 2001. 19. Attached is Schedule of Closing Documents (two pages). This contract is a computer generated copy of the SALEFORM 1993 form, printed under license from the Norwegian Shipbrokers' Association, using the BIMCO Charter Party Editor. Any addition or deletion to the form must be clearly visible. In event of any modification being made to the preprinted text of this document, which is not clearly visible, the original document recommended by BIMCO shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no responsibility for any loss or damage caused as a result of discrepancies between the original document and this document. SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: 1) Bill of Sale (two executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by Marshall Islands law. 2) Commercial Invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants 3) Bunker Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the Shareholders certified by the corporate Secretary. The Secretary's certificate attaching the Board of Directors resolutions will be authenticated by a notary public (i) approving and/or ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's officers or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding the sale. 5) Power of Attorney acknowledged before a Notary Public. 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than three (3) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations affecting Class. 8) Certificate of Corporate Good Standing of the Seller. 9) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 10) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the closing date confirming the vessel is free of recorded mortgages, liens or other encumbrances. 11) Seller's confirmation that, to the best of its knowledge the Vessel: (i) has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) is not blacklisted by the United States of America or any government, state, country or political sub-division thereof. 12) Protocol of Delivery and Acceptance. 13) Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery in the name of Seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and duly acknowledged by a Notary Public. (i) Approving and/ or ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery, (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorizing an Officer or any attorney-in-fact to document the Vessel under the laws of the Republic of the Marshall Islands. 2) Power of Attorney duly acknowledged before a Notary Public. 3) Instructions to the Seller's bank authorizing the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90 % purchase price and (ii) bunkers and lubricants. For the Buyers: For the Sellers: General Maritime Ship Holding Ltd. Blystad Shipholding Inc., Liberia By: /s/ Peter C. Georgiopoulos By: /s/ Erik Ostbye -------------------------------- ---------------------------- VP, FINANCE/SECRETARY EX-2.13 15 a2050304zex-2_13.txt EXHIBIT 2.13 Exhibit 2.13 VESSEL CONTRIBUTION AGREEMENT by and between GENERAL MARITIME SHIP HOLDINGS LTD. as Purchaser and KS STAVANGER PRINCE as Seller May 25, 2001 VESSEL CONTRIBUTION AGREEMENT THIS VESSEL CONTRIBUTION AGREEMENT (this "Agreement") is dated as of May 25, 2001, and is by and among General Maritime Ship Holdings Ltd., a Marshall Islands corporation (to be renamed General Maritime Corporation on or about the Closing Date, "Purchaser"), and KS Stavanger Prince, a Norwegian limited partnership, ("Seller"). Purchaser and Seller are sometimes referred to herein collectively as the "Parties" and each individually as a "Party." RECITALS A. Seller owns the motor tanker described in Exhibit C (the "Vessel"). B. Purchaser contemplates entering into a Recapitalization (as defined in the Plan of Recapitalization attached as Annex I (the "Plan of Recapitalization")) intended to create a company owning and operating a number of motor tankers, including the Vessel, as further described in the Plan of Recapitalization. C. Seller desires to sell the Vessel to Purchaser, and Purchaser desires to acquire the Vessel from Seller, on the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties, intending legally to be bound, agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: 1.01 "Affiliate" means, with respect to a specified Person, any other Person which controls, is controlled by or is under common control with such specified Person. 1.02 "Agreement" means this Agreement and all Exhibits and Schedules annexed hereto, as the same may be amended, supplemented or modified from time to time. 1.03 "Closing" has the meaning assigned to it in Section 3.02. 1.04 "Closing Date" means the date on which the Vessel is delivered to Purchaser as set forth in the MOA. 1.05 "Closing Documents" means the agreements, certificates, instruments, and other documents specified to be executed and/or delivered pursuant to the MOA in connection with the sale of a Vessel thereunder. 1.06 "Escrow Agent" has the meaning ascribed thereto in the Plan of Recapitalization. 1.07 "Escrow Agreement" means the Escrow Agreement executed by Seller regarding the Purchaser Shares in the form of Exhibit A with such changes thereto as may reasonably be required by the Escrow Agent. 1.08 "Existing Charter" means the existing charter to which the Vessel is currently subject, a copy of which is attached hereto as Exhibit F. 1.09 "Governmental Body" means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.10 "IPO Price" means the price per share of Purchaser Stock fixed in the initial public offering of the Purchaser Stock. 1.11 "Laws" means all applicable provisions of all constitutions, treaties, statutes, laws (including, but not limited to, the common law), rules, regulations, ordinances, codes or orders of any Governmental Body and of all orders, decisions, injunctions, judgments, awards and decrees or consents of or agreements with any Governmental Body. 1.12 "Liens" means, with respect to any asset of any Person, any mortgage, lien, maritime lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. 1.13 "Lockup Agreement" means the Lockup Agreement executed by Seller regarding the Purchaser Shares in the form of Exhibit B. 1.14 "Loss," in respect of any matter, means any loss, liability, cost, expense, judgment, settlement or damage arising, directly or indirectly, as a result of or in connection with such matter, including reasonable attorneys', consultants' and other advisors' fees and expenses, reasonable costs of investigating or defending any claim, action, suit or proceeding or of avoiding the same or the imposition of any judgment or settlement. 1.15 "MOA" means the Memorandum of Agreement for the purchase of the Vessel in the form of Exhibit C, together with any addenda thereto. 1.16 "Parties" has the meaning assigned to it in the preamble. 1.17 "Permitted Liens" means (a) any Lien for Taxes which are not yet due; (b) any carrier's, warehouseman's, mechanic's, materialman's, repairman's, landlord's, maritime, or similar statutory or inchoate lien incidental to the ordinary conduct of business which involves an obligation that is not past due; or (c) the Existing Charter. 1.18 "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, governmental body or authority or any other entity. - 2 - 1.19 "Purchaser" has the meaning assigned to it in the preamble. 1.20 "Purchaser Share" means a share of Purchaser Stock. 1.21 "Purchaser Stock" means the common stock of Purchaser, par value $.01 per share. 1.22 "Records" has the meaning assigned to it in Section 6. 1.23 "Registration Statement" means the Registration Statement of Purchaser on Form S-1 concerning the initial public offering of Purchaser Stock. 1.24 "Registration Rights Agreement" means the Registration Rights Agreement by and among Seller, Purchaser, and certain other parties regarding the Purchaser Shares in the form of Exhibit D. 1.25 "Seller" has the meaning assigned to it in the preamble. 1.26 "Tax" or "Taxes" means taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any taxing authority of any Governmental Body, including (a) income, franchise, profits, gross receipts, ad valorem, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 1.27 "Underwriting Agreement" means the Underwriting Agreement with respect to Purchaser Stock by and among Purchaser and the underwriters named therein in connection with the initial public offering of Purchaser. 1.28 "Waiver and Contribution Agreement" means the Waiver and Contribution Agreement to be executed by Seller, substantially in the form of Exhibit E. 2. Purchase and Sale of Vessel 2.01 Purchase and Sale of Vessel. Subject to and upon the terms and conditions set forth in this Agreement, Seller agrees to sell, transfer, convey, assign and deliver to Purchaser, free and clear of all Liens, and Purchaser agrees to purchase and accept from Seller on the Closing Date, all of Seller's right, title and interest in and to the Vessel which Seller owns in exchange for the consideration set forth in the MOA. 2.02 Plan of Recapitalization. The number of Purchaser Shares, timing of issuance, and all other aspects of the issuance of Purchaser Shares to Seller in consideration of the sale of the Vessel to Purchaser shall be according to the terms and conditions specified in the Plan of Recapitalization, which is incorporated herein by reference. Upon the closing of the purchase of the Vessel, IPO-Co shall instruct the Escrow Agent to deliver a certificate evidencing the shares allocated to Seller in respect of the Vessel under Section 9(A)(i) of the Plan of Recapitalization - 3 - to Seller; provided that 10% of such shares shall be placed in Seller's sub-account of the Purchase Price Calculation Account (as defined in the Plan of Recapitalization) to be distributed in accordance with the Plan of Recapitalization. 2.03 Documents for Vessel Sales. The sale of the Vessel shall be pursuant to a MOA and the Closing Documents specified therein. Simultaneously with the execution hereof, Seller and Purchaser are executing and delivering to each other the MOA. Additionally, simultaneously with the execution hereof, Seller shall execute and deliver to Purchaser the Lock-up Agreement. 2.04 Certain Additional Documents. Purchaser and Seller hereby agree to execute the Escrow Agreement and the Registration Rights Agreement at the Recapitalization Closing Time (as defined in the Plan of Recapitalization). 3. Closing 3.01 Closing. The consummation of the purchase and sale of the Vessel (a "Closing") shall be held on the Closing Date, effective at 5:00 p.m. Eastern Standard Time on the Closing Date, at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022. 3.02 Closing Deliveries. On the Closing Date, Seller shall execute and deliver to Purchaser the Waiver and Contribution Agreement and all other documents, agreements and instruments then required to be delivered by Seller pursuant to Section 3.03. The Vessel shall be delivered as set forth in the MOA that has been executed simultaneously herewith, and the Closing Documents specified to be executed and/or delivered by Purchaser or Seller under the MOA shall be delivered concurrently with the delivery of the Vessel. 3.03 Further Assurances. At and from time to time following the Closing, Seller shall deliver to Purchaser such other instruments of conveyance and transfer as Purchaser may reasonably request or as may be otherwise necessary to more effectively convey and transfer to, and vest in Purchaser and put Purchaser in full possession of, the Vessel free and clear of all debts, Taxes, claims, options, liabilities, obligations and Liens, whether matured or unmatured. 4. Seller's Representations and Warranties. Seller represents and warrants to Purchaser as follows: 4.01 Organization and Qualification; Ownership. Seller is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of formation. 4.02 Authorization. Seller has all requisite power and authority to execute and deliver this Agreement, the MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. Seller has duly authorized the execution, delivery and performance of this Agreement, the MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto. This Agreement, the MOA, and each Closing Document that Seller has executed and delivered or is to execute and deliver pursuant thereto has been or will be duly executed and delivered by Seller and (assuming due authorization, execution and - 4 - delivery by the Purchaser) constitutes or, upon execution and delivery thereof, will constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws of general applicability affecting the rights of creditors and by general equitable principles. 4.03 No Violations or Conflicts. The execution, delivery and performance by Seller of this Agreement, the MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto, and the consummation by Seller of the transactions contemplated hereby (and thereby) do not and will not (with the giving of notice or the passage of time or both) (a) violate any provision of Seller's governing documents, (b) result in a violation or breach of, or constitute a default or an event of default under, any indenture, mortgage, bond, contract, agreement, instrument or other obligation to which Seller or by which any of its assets are bound, which would be reasonably likely to adversely affect the ability of Seller to consummate the transactions contemplated hereunder, (c) violate any Law, writ, judgment, injunction, court decree, license or permit to which Seller or any of its assets is subject, or (d) otherwise result in the creation of any Lien on the Vessel. 4.04 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or any other Person is required to be made or obtained by Seller in connection with the execution, delivery and performance of this Agreement, the MOA, and each Closing Document that Seller is to execute and deliver pursuant thereto, other than those disclosed on Schedule 4.04 which have been obtained. 4.05 Ownership of Vessel. Seller is the sole owner of the Vessel. 4.06 Condition of Vessel. The Vessel is in good condition, working order and repair, is classed by Det Norske Veritas or another classification society which is a member of the International Association of Classification Societies with respect to hull and machinery in the highest classification and rating for vessels of similar age, size and description, and is in such condition to merit such classification and rating as of the Closing. 4.07 No Encumbrances. The Vessel will not be subject to any mortgage, lien, pledge, time or demise charter or other encumbrance at the time such Vessel is conveyed by Seller to Purchaser pursuant to this Agreement other than the Existing Charter. 4.08 Insurance. The Vessel is duly insured in accordance with customary and mandatory requirements for vessels of similar age, size and description with respect to hull and machinery, protection and indemnity, war risks, and pollution protection, and shall continue to be so insured by Seller until the Vessel is conveyed by Seller to Purchaser pursuant to this Agreement. 4.09 Litigation. There are no actions, suits or proceedings (in litigation, arbitration or otherwise) pending or threatened against or affecting the Vessel, Seller, or its respective properties, at law, in equity or in admiralty, before any court or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or other instrumentality, domestic or foreign, which may, if adversely determined, result in the imposition - 5 - of a Lien on the Vessel or which would be reasonably likely to adversely affect the ability of Seller to consummate the transactions contemplated hereunder. 4.10 Brokers and Finders. Other than M.J. Gruber & Co., Ltd. and Ness, Risan and Partners AS, the fees of which shall be Seller's sole responsibility, no broker or finder has acted for Seller in connection with this Agreement or the transactions contemplated hereunder and no broker or finder retained by Seller is entitled to any brokerage or finder's fee with respect to this Agreement or such transactions. 4.11 Investment Purpose; Private Placement. (a) Seller has had full opportunity to ask questions of and receive answers from representatives of Purchaser concerning an acquisition of the Purchaser Shares, including financial information concerning Purchaser. Seller was previously informed that all documents, records and books pertaining to such an acquisition were at all times available at the offices of Purchaser located at 35 West 56th Street, New York, NY 10019, and that all documents, records and books pertaining to such an acquisition requested by Seller have been made available to Seller and the persons that Seller has retained to advise it with respect to such an acquisition, and that Seller and such persons have been supplied with such additional information concerning such an acquisition as they have requested. (b) Seller is acquiring the Purchaser Shares solely for the purpose of investment for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable law or with any intention of participating in the formulation, determination, or direction of the basic business decisions of Purchaser. (c) Seller acknowledges that the Purchaser Shares are not registered under the Securities Act of 1933, as amended (the "Securities Act") or any state securities laws, and are being offered and sold in reliance on federal and state exemptions for transactions not involving any public offering. Seller acknowledges that the Purchaser Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to applicable state securities laws and regulations. (d) Seller is an "accredited investor" within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act, and was not organized for the specific purpose of acquiring the Purchaser Shares. (e) Seller, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in the Purchaser Shares and is able to bear the economic risk of such investment. (f) Seller is not relying on Purchaser or any of its officers, directors, employees, founders or agents with respect to the tax and other economic considerations of an investment in the Purchaser Shares. Seller has consulted its own financial, legal, and tax advisors with respect to the economic, legal, and tax consequences of an investment in - 6 - the Purchaser Shares. Seller is not relying on any representations or warranties of Purchaser with respect to the transactions contemplated hereunder other than those contained in Section 5 or on any representations of any officer, director, employee, founder or agent of Purchaser. 4.12 Registration Statement Information. Seller has received and reviewed the Registration Statement. All information concerning Seller in the Registration Statement is complete and correct. Any information provided by Seller for inclusion in the Registration Statement after the date of this Agreement will be complete and correct. 5. Purchaser's Representations and Warranties. Purchaser represents and warrants to Seller as follows: 5.01 Organization and Qualification. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Republic of the Marshall Islands and has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement. 5.02 Authorization. Purchaser has all requisite power and authority to execute and deliver this Agreement, the MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. Purchaser has duly authorized the execution, delivery and performance of this Agreement, the MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto by all necessary corporate action. Each of this Agreement, the MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto (assuming due authorization, execution and delivery by Seller) constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws of general applicability affecting the rights of creditors and by general equitable principles. 5.03 No Violations or Conflicts. The execution, delivery and performance by Purchaser of this Agreement, the MOA, and each Closing Document Purchaser is to execute and deliver pursuant thereto, and the consummation by Purchaser of the transactions contemplated hereby and thereby does not and will not (with the giving of notice or the passage of time or both) (i) violate any provision of Purchaser's governing documents, (ii) result in a violation or breach of, or constitute a default or an event of default under, any indenture, mortgage, bond, contract, license, agreement, permit, instrument or other obligation to which Purchaser is a party or by which any of its assets is bound, or (iii) violate any Law, writ, judgment, injunction or court decree to which Purchaser is subject. 5.04 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or any other Person is required to be made or obtained by Purchaser in connection with its execution, delivery and performance of this Agreement, the MOA, and each Closing Document that Purchaser is to execute and deliver pursuant thereto. - 7 - 5.05 Purchaser Shares. The issuance, transfer, and delivery of the Purchaser Shares hereunder have been duly authorized by all required corporate action on the part of Purchaser, and when issued, transferred, and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable. 5.06 Brokers and Finders. No broker or finder has acted for Purchaser in connection with this Agreement or the transactions contemplated hereunder and no broker or finder retained by Purchaser is entitled to any brokerage or finder's fee with respect to this Agreement or such transactions. 6. Covenants. 6.01 Vessel. From the date hereof until the Closing, Seller will not do any of the following without the prior written consent of Purchaser: (a) operate the Vessel other than in the ordinary course of its business; (b) except as expressly permitted in this Section 6, sell, transfer, lease (other than single voyage charters to customers in the ordinary course) to others or otherwise dispose of its Vessel; (c) enter into any commitment to do any of the foregoing. 6.02 No Solicitation of Alternative Transaction. Seller shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Vessel by any means, directly or indirectly, including any acquisition of Seller itself (collectively, "Acquisition Proposals") until June 30, 2001. Seller shall promptly inform Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) of which it may become aware in respect of an Acquisition Proposal and furnish to Purchaser a copy of any such written inquiry. 6.03 Securities. (a) Seller acknowledges and agrees that any certificates representing Purchaser Shares shall bear the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS." - 8 - (b) Seller acknowledges and agrees that the transfer agent of Purchaser will be instructed to place a stop transfer order prohibiting transfers of Purchaser Shares except in conformity with the legend set forth in Section 6.03(a). 7. Indemnification. 7.01 Survival. All representations and warranties of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith shall survive the Closing Date for two years beginning on the Closing Date. 7.02 Indemnification by Seller. Seller shall indemnify and hold harmless Purchaser and its directors, officers, employees, agents, and representatives, and their respective successors and assigns from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with any breach by Seller of any representation, warranty, covenant or other agreement of Seller contained herein or in the MOA or Closing Document. Seller's sole obligation and Purchaser's sole remedy with respect to indemnification by Seller for a breach of any representation, warranty, covenant or other agreement shall be for Seller to satisfy the remainder of the Loss by returning to Purchaser a number of Purchaser Shares equal to the Loss divided by the IPO Price until Seller has returned a number of shares equal to the number of Purchaser Shares issued to Seller. To the extent Seller and its affiliate transferees no longer own Purchaser Shares sufficient to satisfy its obligations under the preceding sentence, Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limit expressed in the preceding sentence. For greater certainty, in no event shall Seller be required to return to Purchaser more than the number of Purchaser Shares issued to Seller hereunder (or the cash equivalent of such Purchaser Shares based on the IPO Price if Seller and its affiliate transferees no longer own such Purchaser Shares). 7.03 Indemnification by Purchaser. The Purchaser shall indemnify and hold harmless Seller and its directors, officers, employees, agents, and representatives from and against any Loss incurred or suffered by such Person as a result of, arising from or in connection with any breach by such Purchaser of any representation, warranty, covenant or other agreement of such Purchaser contained herein or in the MOA or Closing Document. Purchaser's sole obligation and Seller's sole remedy for a breach by Purchaser of such a representation, warranty, or covenant hereunder shall be for Purchaser to pay Seller the amount of Seller's Loss in cash; provided that Purchaser's total obligations under this Section 7.02 shall in no event exceed the Appraised Value (as defined in the Plan of Recapitalization) of the Vessel minus any Indebtedness (as defined in the Plan of Recapitalization) repaid or to be repaid by Purchaser in connection with the acquisition of the Vessel and any other cash paid to Seller in respect of the Vessel at the closing of the Vessel. 8. Conditions Precedent to Obligations of Purchaser. The obligations of Purchaser under Sections 2 and 3 and the MOA or Closing Document shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser. 8.01 Representations and Warranties. Each and every representation and warranty of Seller contained in this Agreement, any Schedule, the MOA, the Closing Documents called for - 9 - thereunder, or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 8.02 Compliance with Covenants. Seller shall have performed and observed in all material respects all covenants and agreements to be performed or observed by Seller under this Agreement, the MOA, and the Closing Documents called for thereunder at or before the Closing 8.03 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, the MOA, and the Closing Documents called for thereunder shall have been obtained. 8.04 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement, the MOA, and the Closing Documents called for thereunder by Seller and the consummation of the transactions contemplated hereby and thereby shall have been obtained in writing. 8.05 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement, the MOA, or the Closing Documents called for thereunder invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or thereby or which imposes restrictions on Purchaser's right or ability to operate any Vessel shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement, the MOA, or the Closing Documents called for thereunder or which challenges the validity or enforceability of this Agreement, the MOA, or the Closing Documents called for thereunder or which seeks to impose restrictions on Purchaser's right or ability to operate any Vessel, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to any Vessel and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 8.06 MOA. As to the MOA, Seller shall have (a) executed and delivered to Purchaser the MOA, (b) executed and/or delivered, as applicable, all Closing Documents called for to be executed and/or delivered by Seller under the MOA, and (c) satisfied all conditions precedent set forth in the MOA. Purchaser shall not have terminated the MOA in accordance with the terms thereof, including termination of the MOA due to the actual, constructive, or compromised total loss of the Vessel before delivery. 8.07 Lockup Agreement. Seller shall have executed and delivered the Lockup Agreement. - 10 - 8.08 Registration Rights Agreement. Seller shall have executed and delivered to Purchaser the Registration Rights Agreement. 8.09 Completion of IPO. The initial public offering of Purchaser Stock shall have closed. 8.10 Waiver and Contribution Agreement. Seller shall have executed and delivered to Purchaser a Waiver and Contribution Agreement. 8.11 Other Closing Matters. Purchaser shall have received such other supporting information in confirmation of the representations, warranties, covenants and agreements of Seller and the satisfaction of the conditions to Purchaser's obligation to close hereunder as Purchaser or its counsel may reasonably request. 9. Conditions Precedent to Obligations of Seller. The obligations of Seller under Sections 2 and 3 and the MOA or Closing Document shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by such Seller: 9.01 Representations and Warranties. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule, the MOA, the Closing Documents called for thereunder, or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 9.02 Compliance with Covenants. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement, the MOA, and the Closing Documents called for thereunder at or before the Closing. 9.03 Regulatory Approvals. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement, the MOA, and the Closing Documents called for thereunder shall have been obtained. 9.04 Consents of Third Parties. All consents from third parties necessary for the execution and delivery of this Agreement, the MOA, and the Closing Documents called for thereunder by Purchaser and the consummation of the transactions contemplated hereby shall have been obtained in writing. 9.05 No Violation of Orders. No preliminary or permanent injunction or other order issued by Governmental Body, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement, the MOA, or the Closing Documents called for thereunder invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or thereby shall be in effect. - 11 - 9.06 MOA. As to the MOA, Purchaser shall have (a) executed and delivered to Seller the MOA, (b) executed and/or delivered, as applicable, all Closing Documents called for to be executed and/or delivered by Purchaser under the MOA, and (c) satisfied all conditions precedent set forth in the MOA. 9.07 Registration Rights Agreement. Purchaser shall have executed and delivered to Seller the Registration Rights Agreement. 9.08 Underwriting Agreement. The Underwriting Agreement shall have been executed and delivered by the parties thereto. 9.09 Other Closing Matters. Seller shall have received such other supporting information in confirmation of the representations, warranties, covenants and agreements of Purchaser and the satisfaction of the conditions to Seller's obligations to close hereunder as Seller or its counsel may reasonably request. 10. Termination of Agreement. 10.01 Conditions for Termination. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and Seller; (b) by Purchaser or Seller (i) if the IPO does not occur on or before June 15, 2001 or (ii) if the Closing shall not have been consummated with respect to such Vessel by one hundred eighty (180) days after the date hereof, unless such failure of occurrence or consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the party or parties seeking to terminate this Agreement; or (c) by Purchaser or Seller if the other party fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such breach from the non-breaching party, provided, however, that Purchaser or such Seller shall not be entitled to terminate this Agreement pursuant to this Section 10.01(c) if it is also in material breach of any provision of this Agreement. 10.02 Effect of Termination. Upon the termination of this Agreement for any reason, Purchaser and Seller shall have no liability or further obligations arising out of this Agreement to each other except for any liability resulting from an intentional breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Section 11 shall survive any termination of this Agreement. 11. General Provisions 11.01 Commonly Used Terms. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof" and "herein" refer to this Agreement. - 12 - (b) "Including" means including, without limitation, whether or not so expressed. (c) References to Sections, Exhibits, and Schedules mean, respectively, Sections, Exhibits, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. 11.02 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be (i) sent by registered or certified mail, return receipt requested, (ii) hand delivered or (iii) sent by prepaid overnight carrier, with a record of receipt, to the Parties at the following addresses (or at such other addresses as shall be specified by the Parties by like notice): (a) if to Purchaser: c/o General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5603 Confirm: (212) 763-5600 with copies to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, New York 10022 Attn: Thomas E. Molner, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 (b) if to the Seller: KS Stavanger Prince ______________________ ______________________ ______________________ with a copy to: ______________________ ______________________ ______________________ ______________________ [others] - 13 - Each notice or communication shall be deemed to have been given on the date received. 11.03 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 11.04 Entire Agreement. This Agreement, together with the MOA and the Closing Documents, constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof. 11.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns and is not intended to confer upon any other Person (including, without limitation, any directors, officers, employees, independent contractors, agents or representatives of Seller), any rights or remedies hereunder. 11.06 Governing Law. This Agreement shall be governed, including, without limitation, as to validity, interpretation and effect, by the internal laws of the State of New York, without regard to the principles of conflicts of laws. 11.07 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute a single agreement. Signed facsimile copies of this Agreement will legally bind the Parties to the same extent as original documents. 11.08 FORUM SELECTION AND CONSENT TO JURISDICTION. Any litigation based hereon, or arising out of, under or in connection with, this Agreement or the transactions contemplated hereby may be (but shall not be required to be) brought and maintained in the courts of the State of New York or in the United States District Court for the Southern District of New York. The Parties hereby expressly and irrevocably submit to the jurisdiction of the courts of the State of New York and of the United States District Court for the Southern District of New York for the purpose of any such litigation as set forth above and irrevocably agree to be bound by any judgment rendered thereby in connection with such litigation. The Parties further irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of New York. Each of the Parties hereby expressly and irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter may have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in an inconvenient forum. 11.09 Agent for Service of Process. Seller hereby irrevocably designates Anaconda Opportunity Fund, L.P., 730 Fifth Avenue, NY, NY 10019, as its agent for service of process in connection with this Agreement. 11.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either Party without the prior written consent of the other Party; provided, however, that Purchaser may assign any of its rights hereunder (including the right to purchase the Vessel) to any affiliate of Purchaser which assumes the corresponding obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations. - 14 - Neither Party shall be relieved of any liability arising hereunder in respect of any assignment pursuant to this Section, unless such assignor has received a written release expressly excepting such assignor from any liability that may arise hereunder. 11.11 Waiver; Amendment. No waiver of any term, condition or obligation of this Agreement shall be valid unless in writing and signed by the waiving party. No failure or delay by either Party at any time to require the other Party to perform strictly in accordance with the terms hereof shall preclude such Party from requiring performance by the other Party at any later time. No waiver of any one or several of the terms, conditions or obligations of this Agreement, and no partial waiver thereof, shall be construed as a waiver of any of the other terms, conditions or obligations of this Agreement. This Agreement may not be amended, changed or modified in any fashion except by written instrument signed by each of the Parties. 11.12 Fees and Expenses. Except as otherwise expressly set forth herein, all fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such fees, costs or expenses. Seller shall bear and pay all Taxes that arise out of or as a result of the consummation of this Agreement and the MOA. 11.13 No Third Party Beneficiary Rights. No provisions of this Agreement are intended, nor will be interpreted, to provide or create any third party beneficiary rights or other rights of any kind in any client, customer, affiliate, stockholder or partner of either Party or any other Person unless specifically provided otherwise herein, and, except as so provided, all provisions hereof will be personal solely between the Parties. 11.14 Negotiated Agreement. The Parties acknowledge that each of them has been advised and represented by counsel in the negotiation, execution and delivery of this Agreement and accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against a Party because such Party or its representatives drafted such provision. 11.15 Public Announcements. Neither Party shall make any press release or public announcement concerning this Agreement or the transactions contemplated hereby without the prior written approval of the other. 11.16 Remedies Cumulative. The remedies provided for or permitted by this Agreement shall be cumulative, and the exercise by either Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein, under applicable Laws, at equity, or otherwise. 11.17 Severability. Subject to the specific provisions of Section 8, if any provision of this Agreement shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as to such jurisdiction only as if any such invalid or unenforceable provision were not contained herein. 11.18 JURY TRIAL WAIVER. Each of the Parties hereby irrevocably waives all right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or the transactions contemplated hereby. - 15 - [Signature page follows.] - 16 - IN WITNESS WHEREOF, each Party hereto has duly executed this Agreement as of the date first above written. GENERAL MARITIME SHIP HOLDINGS LTD. By: /s/ Peter C. Georgiopoulos --------------------------------- Name: Peter C. Georgiopoulos Title: Vice President KS STAVANGER PRINCE By: /s/ Mitchell J. Kelly --------------------------------- Name: Mitchell J. Kelly Title: - 17 - LIST OF ANNEXES AND EXHIBITS* ANNEXES: Annex I--Plan of Recapitalization EXHIBITS: Exhibit A--Escrow Agreement Exhibit B--Lockup Agreement Exhibit C--Memorandum of Agreement Exhibit D--Registration Rights Agreement Exhibit E--Waiver and Contribution Agreement * Omitted Annexes and Exhibits will be furnished supplementally to the Commission upon request. EX-2.14 16 a2050304zex-2_14.txt EXHIBIT 2.14 Exhibit 2.14 MEMORANDUM OF AGREEMENT Dated: 4th May 2001 KS Stavanger Prince, Stavanger Norway hereinafter called the Sellers, have agreed to sell, and General Maritime Ship Holdings Ltd. a Marshall Islands Corporation (to be renamed General Maritime Corporation) hereinafter called the Buyers, have agreed to buy Name: MT Stavanger Prince Classification Society/Class: Dot Norska Veritas 1A1 tanker for oil Built: 1979 By: Ishikawajima - Harima Heavy Industries Co. Ltd Flag: Norwegian Place of Registration: Norwegian International Ship Register Call Sign: LAGJ2 Grt/Nrt: 45,725/25.692 Register Number: N-00210 IMO 760 6532 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking Days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" mean the Society referred to above. "Shares" to mean shares of common stock of the Buyers. 1. Purchase Price Repayment of indebtedness of the partnership and/or banks related to the vessel of not less than USD 4,400,000 and not more than USD 4,800,000 ("Debt") and a number of shares as determined under Section 2.02 of the Master Vessel Contribution Agreement between Buyers and Sellers to which this Memorandum of Agreement is attached (the "Master Vessel Contribution Agreement"), using USD 7,600,000 as the appraised value of the vessel (the "Appraised Value"). 2. Deposit As security for the correct fulfillment of this Agreement the Buyers shall pay a deposit of 10% (ten per cent) of the Purchase Price in shares within 3 (three) banking days from the date of this Agreement being signed by fax and all subjects lifted, whichever is later. This deposit shall be placed with Sellers New York Bank. and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, if any, to be credited the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in full in cash free of bank charges in the amount of USD 4,400,00 - 4,800,000 to Sellers account at Fokus Bank ASA, Trondheim, Norway Swift FOKB NO 22 - KS Stavanger Prince, A/C No. 8801.04.75862. Corresponding bank in USA: Chase Manhattan Bank, New York A/C No. 0011570866 and the balance to be paid in shares in exchange for the delivery documents required by Buyers free of bank charges to Payment method is described in the Master Vessel Contribution Agreement attached hereto. on delivery of the vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. The day on which the Notice of Readiness is given shall not be included for the purpose of counting the number of days in the preceding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Lake Charlas on 17th May 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and 4 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4 a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 10, 5 and 3 days notice of the estimated time of arrival at the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage at One safe port within Institutes Warranties Limited, Intention U.S.Gulf basis vessel's present known trading program. in the Sellers' option. Expected time of delivery: 15th May - 15th June 2001 Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 15th June 2001 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in Clause 5 b). If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in clause 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers inspection b)** (i) The Vessel is to be delivered without drydocking. However, the Buyers shall have the right at their expense to arrange for an underwater inspection by a diver approved by the Classification Society prior to delivery of the Vessel. The Sellers shall at their cost make the Vessel available for such inspection. The extent of the inspection and the conditions under which it is performed shall be to the satisfaction of the Classification Society. If the conditions at the port of delivery are unsuitable for such inspection, the Sellers shall make the Vessel available at a suitable alternative place near to the delivery port. (ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken, damaged or defective so as to affect the Vessel's class, then unless repairs can be carried out to the satisfaction of the Classification Society, the Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by the Classification Society of the Vessel's underwater parts below the deepest load line, the extent of the inspection being in accordance with the Classification Society's rules. If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken, damaged or defective so as to affect the Vessel's class, such defects shall be made good by the Sellers at their expense to the satisfaction of the Classification Society without condition/recommendation*. In such event the Sellers are to pay also for the cost of the underwater inspection and the Classification Society's attendance. (iii) If the Vessel is to be drydocked pursuant to Clause 6 b) (ii) and no suitable drydocking facilities are available at the port of delivery, the Sellers shall take the Vessel to a port where suitable drydocking facilities are available, whether within or outside the delivery range as per Clause 5 b). Once drydocking has taken place the Sellers shall deliver the Vessel at a port within the delivery range as per Clause 5 b) which shall, for the purpose of this Clause, become the new port of delivery. In such event the cancelling date provided for in Clause 5 b) shall be extended by the additional time required for the drydocking and extra steaming, but limited to a maximum of 14 (fourteen) running days. c) If the Vessel is drydocked pursuant to Clause 6 a) or 6 b) above (i) the Classification Society may require survey of the tailshaft system, the extent of the survey being to the satisfaction of the Classification surveyor. If such survey is not required by the Classification Society, the Buyers shall have the right to require the tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey being in accordance with the Classification Society's rules for tailshaft survey and consistent with the current stage of the Vessel's survey cycle. The Buyers shall declare whether they require the tailshaft to be drawn and surveyed not later than by the completion of the inspection by the Classification Society. The drawing and refitting of the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be condemned or found defective so as to affect the Vessel's class, those parts shall be renewed or made good at the Seller's expense to the satisfaction of the Classification Society without condition/recommendation*. (ii) the expense relating to the survey of the tailshaft system shall be borne by the Buyers unless the Classification Society requires such survey to be carried out, in which case the Sellers shall pay these expenses. The Sellers shall also pay the expenses if the Buyers require the survey and parts of the system are condemned or found defective or broken so as to affect the Vessel's class*. (iii) the expense in connection with putting the Vessel in and taking her out of drydock, including the drydock dues and the Classification Society's fees shall be paid by the Sellers if the Classification Society issues any condition/recommendation* as a result of the survey or if it requires survey of the tailshaft system. In all other cases the Buyers shall pay the aforesaid expenses, dues and fees. (iv) the Buyers' representative shall have the right to be present in the drydock, but without interfering with the work or decisions of the Classification surveyor. (v) the Buyers shall have the right to have the underwater parts of the Vessel cleaned and painted at their risk and expense without interfering with the Sellers' or the Classification surveyor's work, if any, and without affecting the Vessel's timely delivery. If, however, the Buyers' work in drydock is still in progress when the Sellers have completed the work which the Sellers are required to do, the additional docking time needed to complete the Buyers' work shall be for the Buyers' risk and expense. In the event that the Buyers' work requires such additional time, the Sellers may upon completion of the Sellers' work tender Notice of Readiness for delivery whilst the Vessel is still in drydock and the Buyers shall be obliged to take delivery in accordance with Clause 3, whether the Vessel is in drydock or not and irrespective of Clause 5 b). * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. ** 6 a) and 6 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 6 a) to apply. 7. Spares/bunkers etc The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of this Agreement inspection used or unused, whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as Time charterers belongings to be excluded from the sale. The Buyers shall take over the unused lubricating oils in storage tanks and sealed drums and pay Sellers' last proven invoiced net contract price (i.e. presentation of invoices to Buyers) at the port and date of delivery of the Vessel. Bunkers rob is Charterers property and shall be excluded from the sale. Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents. See clause 18 herein: At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers have the right to take copies. Other technical documentation which may be in the Sellers' possession shall promptly be forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books, but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of this Agreement, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of this Agreement valid and unextended without condition/recommendation* by Class or the relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings The Buyers undertake to change the name of the Vessel and alter funnel markings within 6 - 9 months from time of delivery. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel this Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in Clause 5 b), last line, the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given, but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in Clause 5 b), last line, and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in Clause 5 b), last line, or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, Buyers have the right to place two representatives on board the Vessel at their sole risk and expense. The Buyers shall pay their representatives' expenses onboard at a rate of USD 25/day/person plus communication expenses. These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1850 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree, they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. 17. Documentation clause Documents to be delivered by buyer: 1. Certificate of Resolutions of the Buyer duly notarised and legalised approving and ratifying the execution of the MoA, and resolving to issue Power of Attorney in favour of Buyers' representative on board the vessel and at the closing meeting. 2. Power of Attorney by Buyers' Bank in favour of their representative. 3. Documents to be delivered by seller: 4. Two original bills of sale, notarised and legalised by an apostille. 5. Original Commercial Invoice stating the date of the MOA and the selling price. 6. Original Transcipt of Register of the Vessel, to be issued by the Ship Registry, certifying the ownership of the Vessel, free from encumbrances dated on the closing date. 7. Letter of Undertaking by Seller to provide Cancellation Certificate immediately after delivery. (omit if vessel is to remain MS registered) 8. Meeting of Partnership Resolution, notarised and apostilled, authorising sale to Buyers and resolving to issue Power of Attorney in favour of person executing Bill of Sale. 9. Protocol of Delivery and Acceptance, executed by the due authorised attorney of Sellers. 10. Original Good Standing certificate of the Sellers. 11. Copy International Tonnage Certificate. 12. Copy Safety Radiotelephony Certificate. 13. Written instruction of the Sellers to the Master of the vessel to physically deliver the Vessel to the Buyers, to be executed by duly authorised attorney of the Sellers. 14. Letter from Seller confirming that to the best of their knowledge Vessel is not blacklisted by any nation or organisation. 15. Confirmation of class certificate issued by Dat Norska Varitas dated not more than two (2) days prior to the delivery date confirming that the Vessel is in Class fully maintained free of any conditions or recommendations and free of average damage affecting the Vessel Class. 16. Confirmation from Seller that vessel has not touched bottom since most recent drydocking on or about July 2000. Documents to be signed by Sellers and Buyers: o Protocol of delivery and Acceptance o Addendum to the existing Time Charter o Invoice for unused lubricating oils. o Invoice for expenses related to buyers' representatives on board the Vessel prior to delivery. 18. Tripartite agreement This agreement to included an addendum to the existing time charterparty dated 13.12.2000 between the seller as Owners, and MTL Petrolink as the Charterer. Such addendum to be signed by the Sellers, Buyers and the Charterer. The Buyers shall assume the obligation of the Seller under the charter commencing as from the date and time of delivery of the vessel to the Buyer under this agreement. The Buyer shall not be responsible to the charterer for any obligation of the Seller under the charter prior to the time and date of delivery, and the Seller will indemnify and hold the Buyer harmless from any claim that may be asserted by the charterer against the Buyer for any such pre-existing claims. The c/p expires 13.01.2002 plus or minus 15 days in Time Charterers' option. Tripartite agreement must contain a clause whereby the Charterer agrees not to hold either the Buyers or the Vessel liable for any claims under the Time Charter which pre date the transfer of the Vessel from the Seller to the Buyer. Signed by: SELLERS: BUYERS: /s/ KS Stavanger Prince /s/ Peter C. Georgiopoulos - ------------------------------ ------------------------------ KS Stavanger Prince General Maritime Ship Holdings Ltd ADDENDUM NUMBER 1 to Memorandum of Agreement dated 4th May 2001 (the "MOA") between KS Stavanger Prince, Stavanger Norway as Sellers and General Maritime Ship Holdings Ltd. a Marshall Islands Corporation (to be renamed General Maritime Corporation) as Buyers. Vessel: MT Stavanger Prince 1) With reference to Clause 1, the words 'not less than USD4,400,000 and not more than USD4,600,000' are deleted and replaced with '4,500,000.' 2) With reference to Clause 2, the words in the second line 'Purchase Price in shares are deleted and replaced with "Appraised Value in cash". 3) With reference to Clause 3, the words 'USD4,400,000 - 4,600,000" are deleted and replaced with 'the Debt" 4) With reference to Clause 5, the expected time of delivery is amended to read 15th June-15th July 2001 and the Date of Canceling is amended to 15 July 2001. 5) This Memorandum of Agreement is subject to the Buyer completing an initial public offering of its Common Stock, par value USD.01 per share not later than June 30th 2001. All other terms and condition of MOA dated 4th May 2001 to remain unaltered. New York, May 23, 2001 The Sellers: The Buyers: /s/ KS Stavanger Prince /s/ Peter C. Georgiopoulos - ------------------------------ ------------------------------ KS Stavanger Prince General Maritime Ship Holdings Ltd EX-2.15 17 a2050304zex-2_15.txt EXHIBIT 2.15 Exhibit 2.15 May 25, 2001 General Maritime Ship Holdings Ltd. 35 West 56th Street New York, New York 10019 Re: Letter Agreement Ladies and Gentlemen: This letter will confirm our agreement that as the sole stockholder of General Maritime Corporation, a Marshall Islands Corporation ("Genmar"), I will sell to you all of the outstanding shares of stock of Genmar pursuant to the Plan of Recapitalization annexed to the Contribution Agreements and otherwise upon terms substantially equivalent to those Contribution Agreements. "Contribution Agreements" means the Contribution Agreements to which you are a party relating to the Cayman Islands limited partnerships for which affiliates of Genmar serve as managing general partner. Very truly yours, /s/ Peter C. Georgiopoulos ------------------------------------------ Peter C. Georgiopoulos Accepted and Agreed: General Maritime Ship Holdings Ltd. By: /s/ John P. Tavlarios --------------------------------- Name: John P. Tavlarios Title: President EX-4.1 18 a2050304zex-4_1.txt EXHIBIT 4.1 Note 4: color process not changeable
- --------------------------------------------------------------------------------------------- AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR: BELINDA BECK: 215-764-8619 55TH STREET AT SANSOM STREET PROOF OF MAY 23, 2001 PHILADELPHIA, PA 19139 GENERAL MARITIME CORP. (215) 764-8600 H 70054 face - --------------------------------------------------------------------------------------------- SALES: R. JOHNS: 212-269-0339 X-13 OPERATOR: eg/rl/hj/eg - --------------------------------------------------------------------------------------------- /NET/BANKNOTE/HOME 46/GENERAL/H70054 rev 5 - ---------------------------------------------------------------------------------------------
[LOGO] GENERAL MARITIME CORPORATION INCORPORATED UNDER THE LAWS OF THE MARSHALL ISLANDS NUMBER COMMON STOCK GMR SHARES THIS CERTIFICATE IS TRANSFERABLE IN SEE REVERSE FOR CERTAIN DEFINITIONS NEW YORK, NY AND RIDGEFIELD PARK, NJ CUSIP Y2692M 10 3 THIS CERTIFIES THAT IS OWNER OF FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.01 EACH OF THE COMMON STOCK OF GENERAL MARITIME CORPORATION CERTIFICATE OF STOCK transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: COUNTERSIGNED AND REGISTERED: MELLON INVESTOR SERVICES LLC TRANSFER AGENT AND REGISTRAR, By AUTHORIZED SIGNATURE
/s/ James Christodoulou [Seal] /s/ Peter C. Georgiopoulos CHIEF FINANCIAL OFFICER GENERAL MARITIME CORPORATION CHAIRMAN, CHIEF EXECUTIVE OFFICER CORPORATE SEAL 2000 MARSHALL ISLANDS
- -------------------------------------------------------------------------------- This color proof is not a true representation of the actual document. - -------------------------------------------------------------------------------- The Corporation will furnish without charge to each stockholder who so requests a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ...........Custodian......... TEN ENT -- as tenants by entireties (Cust) (Minor) JT TEN -- as joint tenants with right of under Uniform Gifts to Minors survivorship and not as tenants Act.......................... in common (State)
Additional abbreviations may also be used though not in the above list. For value received, ________________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - --------------------------------------- | | - --------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- __________________________________________________________________________shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ________________________________________________________________________Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated________________________ _________________________________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE(S) GUARANTEED: __________________________________________________________________________ THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
- -------------------------------------------------------------------------------------------- AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR: BELINDA BECK: 215-764-8619 55TH STREET AT SANSOM STREET PROOF OF MAY 23, 2001 PHILADELPHIA, PA 19139 GENERAL MARITIME CORP. (215) 764-8600 H 70054 back - -------------------------------------------------------------------------------------------- SALES: R. JOHNS: 212-269-0339 X-13 OPERATOR: eg - -------------------------------------------------------------------------------------------- /NET/BANKNOTE/HOME 46/GENERAL/H70054 NEW - --------------------------------------------------------------------------------------------
EX-4.2 19 a2050304zex-4_2.txt EXHIBIT 4.2 Exhibit 4.2 FORM OF REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of ___________, 2001 by and between GENERAL MARITIME SHIP HOLDINGS LTD., a Marshall Islands corporation to be renamed General Maritime Corporation upon the initial closing pursuant to the Acquisition Agreements (the "Company"), and the persons listed on Schedule 1 attached hereto (the "Securityholders"). The Securityholders are the beneficial owners of certain Registrable Securities (as defined below) issued by the Company. The Company and the Securityholders deem it to be in their respective best interests to set forth the rights of the Securityholders or other Holders in connection with public offerings and sales of the Registrable Securities. NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth, the Company and the Securityholders, intending legally to be bound, hereby agree as follows. Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Acquisition Agreement" means any of the agreements listed on Schedule 2 hereto. "Affiliate" of any person shall mean any other person who either directly or indirectly is in control of, is controlled by, or is under common control with, such person. "Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in the City of New York are authorized by law, regulation or executive order to close. "Capital Stock" shall mean all shares, interests, participations, rights or other equivalents (however designated) of corporate stock. "Common Stock" shall mean the common stock, par value $0.01 per share, of the Company. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended (or any similar successor federal statute), and the rules and regulations thereunder, as the same are in effect from time to time. "GP Securities" means Registrable Securities issued to companies owned, directly or indirectly, by Peter Georgiopoulos in respect of (i) equity interests of any Managing General Partner of an Exchanging Partnership (as defined in the Plan of Recapitalization) which they are entitled to receive as general partner pursuant to the Acquisition Agreements other than on account of a Managing General Partner's capital contribution or (ii) the equity of General Maritime Corporation, a Marshall Islands corporation to be renamed upon its acquisition by the Company (and any other securities issued or issuable in respect thereof as a result of or in connection with any stock dividend, stock split or reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution). "Hold-Back Election" shall have the meaning set forth in Section 7(a) hereof. "Holder" shall mean any Person that owns Registrable Securities, including such successors and assigns as acquire Registrable Securities, directly or indirectly, from such Person. For purposes of this Agreement, the Company may deem the registered holder of a Registrable Security as the Holder thereof. "Holder Representative" shall be a representative who is a Holder chosen by Holders of a majority of Registrable Securities participating in any offering undertaken pursuant to Section 3 who shall have the authority to take any action or exercise or waive any right hereunder on behalf of all such Holders with respect to such offering. "Market Value" shall mean the value per share of Common Stock determined as follows: (a) if the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq Stock Market, the Market Value shall be the average of the last reported sale price of the Common Stock on such exchange or market on the last twenty (20) trading days prior to the date on which a demand for registration is made pursuant to Section 3, or if no such sale is made on any such day, the average closing bid and asked prices for such day on such exchange or market; or (b) if the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the Market Value shall be an amount, not less than book value per share of Common Stock of the Company at the end of the most recent fiscal year of the Company ending prior to the date on which a demand for registration is made pursuant to Section 3, determined in good faith and in such reasonable manner as may be prescribed by the Board of Directors of the Company. "Material Development Condition" shall have the meaning set forth in Section 6(b) hereof. "Person" shall mean an individual, partnership, corporation, limited liability company, joint venture, trust or unincorporated organization, a government or agency or political subdivision thereof or any other entity. "Plan of Recapitalization" means the Plan of Recapitalization annexed to the Acquisition Agreements. "Post-Closing Sellers" shall have the meaning set forth in the Plan of Recapitalization. "Prospectus" shall mean the prospectus included in any Registration Statement, as amended or supplemented by a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. "Registrable Securities" shall mean the Common Stock issued to the Securityholders pursuant to the Acquisition Agreements and any other securities issued or issuable as a result of or in connection with any stock dividend, stock split or reverse stock split, - 2 - combination, recapitalization, reclassification, merger or consolidation, exchange or distribution in respect of such Common Stock. "Registration Expenses" shall have the meaning set forth in Section 8 hereof. "Registration Statement" shall mean any registration statement which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included therein, all amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "Restricted Securities" shall have the meaning set forth in Section 2 hereof. "Rule 144" shall mean Rule 144 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "Rule 415" shall mean Rule 415 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "Rule 903" shall mean Rule 903 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "Rule 904" shall mean Rule 904 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "SEC" shall mean the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended (or any similar successor federal statute), and the rules and regulations thereunder, as the same are in effect from time to time. "Stockholder Rights Plan" means a plan or other arrangement pursuant to which stockholders of the Company are issued rights to acquire securities of the Company at a price that is determined by reference to the current market price or other measure of fair value for such securities and is more than 20% below such price or value, such issuance to occur upon a person becoming the owner of more than a specified percentage of a class of the Company's securities, or a specified number of such securities, and such plan or arrangement providing that such rights are exercisable by all holders of the rights other than such person and/or its affiliates. "Underwritten Offering" shall mean a registered offering in which securities of the Company are sold to an underwriter for reoffering to the public. - 3 - Section 2. Securities Subject to this Agreement. The securities entitled to the benefits of this Agreement are the Registrable Securities but, with respect to any particular Registrable Security, only so long as such security continues to be a Restricted Security. A Registrable Security that has ceased to be a Registrable Security cannot thereafter become a Registrable Security. As used herein, a Restricted Security is a Registrable Security which has not been distributed in accordance with an effective Registration Statement and which has not been distributed by a Holder pursuant to Rule 144, Rule 903 or Rule 904, unless, in the case of a Registrable Security distributed pursuant to Rule 903 or 904, any applicable restricted period has not expired or the SEC or its staff has taken the position in a published release, ruling or no-action letter that securities distributed under Rule 903 or 904 are ineligible for resale in the United States under Section 4(1) of the Securities Act notwithstanding expiration of the applicable restricted period. Securities shall cease to be Registrable Securities at such time as they are tradeable without restriction as to volume pursuant to Rule 144 (except for purposes of Section 11 and with respect to amendments or waivers of Section 11 or Section 14). Section 3. Demand Registration for Underwritten Offerings. (a) Demand. Upon the written request of a Holder or Holders of the lesser of (i) 10% of the Registrable Securities originally issued (without reduction for shares of Common Stock that cease to be Registrable Securities) and (ii) Registrable Securities having an aggregate Market Value of at least $50 million, at any time after an initial public offering of securities of the Company but before the tenth anniversary of the date hereof, requesting that the Company effect an Underwritten Offering of Registrable Securities under the Securities Act and specifying the intended method of disposition thereof, the Company will use its commercially reasonable efforts to effect, as expeditiously as possible (and in any event within 60 days), the registration under the Securities Act of the Registrable Securities which the Company has been so requested to register by such Holders of the Registrable Securities; provided, however, that the Company shall not be obligated to effect more than an aggregate of five (5) demand registrations pursuant to this Section 3; and provided, further, that no Holder shall deliver a request for a demand registration for a registration to be effective within 180 days following the last date on which a Registration Statement filed in respect of the previous registration hereunder, if any, was effective. Upon receipt of any request for registration pursuant to this Section 3 from any Holders of Registrable Securities, the Company shall promptly give written notice of such request to all other Holders. The Company shall include in the requested registration all Registrable Securities requested to be included by such of the other Holders who shall make such request by written notice to the Company delivered within 15 Business Days of their receipt of the Company's notice. If the Company shall receive a request for inclusion in the registration of the Registrable Securities of additional Holders, it shall promptly so inform the Holders who made the initial request for registration. A Holder or Holders requesting a registration pursuant to this Section 3 may, at any time prior to the effective date of the Registration Statement relating to such registration, revoke such request by providing a written notice to the Company revoking such request. A registration requested pursuant to this Section 3(a) shall not be deemed to have been effected unless a registration statement with respect thereto has become effective and the Registrable - 4 - Securities registered thereunder for sale on a firm commitment basis are sold to the underwriters thereunder or are not so sold solely by reason of an act or omission by the Holders thereof; provided, however, that if such registration does not become effective after the Company has filed it solely by reason of a Holder's or Holders' refusal to proceed and such refusal to proceed is the second or more such refusal to proceed by a Holder requesting registration under this Section 3 (other than a refusal to proceed based upon the advice of counsel relating to a matter with respect to the Company), then such registration shall be deemed to have been effected unless the requesting Holders shall have elected to pay all reasonable out-of-pocket Registration Expenses in connection with such registration. (b) Effectiveness of Registration Statement. The Company agrees to use its commercially reasonable best efforts to (x) cause the Registration Statement relating to any demand registration pursuant to this Section 3 to become effective as promptly as practicable (and in any event within 60 days) following a request for registration under Section 3(a); (y) thereafter keep such Registration Statement effective continuously for the period specified in the next succeeding paragraph; and (z) prevent the happening of any event of the kinds described in clauses (4), (5) and (6) of Section 6(a)(ii). Except as provided in the last paragraph of Section 3(a) above, a demand registration requested pursuant to this Section 3 will not be deemed to have been effected unless the Registration Statement relating thereto has become effective under the Securities Act and remained continuously effective (except as otherwise permitted under this Agreement) for a period ending on the earlier of (i) the date which is six months (or one year with respect to a shelf registration on Form S-1 undertaken pursuant to Section 3(a)) after the effective date of such Registration Statement (subject to extension as provided in Section 6(b)) and (ii) the date on which all Registrable Securities covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed. (c) Inclusion of Other Securities; Cutback. The Company, and any other holder of the Company's securities who has registration rights, may include its securities in any demand registration effected pursuant to this Section 3; provided, however, that if the managing underwriter of a proposed Underwritten Offering contemplated thereby advises the Holder or Holders in writing that the total amount or kind of securities to be included in such proposed public offering is sufficiently large or of a type which such managing underwriter believes would materially adversely affect the success of the proposed public offering requested by the Holder or Holders, then the amount or kind of securities offered for the account of the following groups of holders shall be reduced pro rata among members of such group in accordance with such managing underwriter's recommendation in the following order of priority (with the securities to be reduced first listed first): (i) securities other than Registrable Securities, (ii) securities offered by the Company, (iii) the GP Securities and (iv) Registrable Securities other than the GP Securities, and provided that no Registrable Securities shall be reduced until all securities other than Registrable Securities and securities offered by the Company are entirely excluded from the underwriting. Section 4. Shelf Registration. (a) (i) At such time as the Company is able to use Form S-3 under the Securities Act (or any successor form) for sales of Registrable Securities by selling stockholders or (ii) at any time following the third anniversary of the Company's initial - 5 - public offering, at the request of Holders of the lesser of (x) 5% of the Registrable Securities originally issued (without reduction for shares of Common Stock that cease to be Registrable Securities) and (y) Registrable Securities having an aggregate Market Value of at least $25 million, the Company shall use its commercially reasonable efforts to effect, as expeditiously as possible, the registration under the Securities Act of any number of Registrable Securities for which it receives requests in accordance with Section 4(a) (the "Shelf Registration"). The Company shall use its commercially reasonable best efforts to cause such Registration Statement to become effective as promptly as practicable (and in any event within 60 days following either date in clause (i) or (ii) above) and maintain the effectiveness of such Registration Statement (subject to the terms and conditions herein) for a period ending on the earliest of (i) two years following the date on which such Registration Statement first becomes effective (but one year if the Company is not able to use Form S-3 under the Securities Act (or any successor form)), and (ii) the date on which all Registrable Securities covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed or have become freely tradeable pursuant to Rule 144 without regard to volume. (b) The Shelf Registration Statement pursuant to this Section 4 shall to the extent possible under applicable law, be effected to permit sales on a continuous basis pursuant to Rule 415 under the Securities Act. Any takedown under the Shelf Registration pursuant to this Section 4 may or may not be underwritten; provided that (i) Holders may request any underwritten takedown only to be effected as a demand registration under Section 3(a) (in which event, unless such demand registration would not require representatives of the Company to meet with prospective purchasers of the Company's securities, a demand registration must be available thereunder and the number of demand registrations available shall be reduced by one subject to the last paragraph of Section 3(a)) or (ii) holders may request an unlimited number of underwritten takedowns to be effected in accordance with the terms of Section 5. The Company shall be entitled to effect the Shelf Registration on any available form under the Securities Act. (c) In the event of a request for a Shelf Registration pursuant to Section 4(a), the Company shall give written notice of the proposed filing of the Registration Statement in connection therewith to all Holders of Registrable Securities offering to each such Holders the opportunity to have any or all of the Registrable Securities held by such Holders included in such registration statement. Each Holder of Registrable Securities desiring to have its Registrable Securities registered under this Section 4(c) shall so advise the Company in writing within 15 Business Days after the date of such notice from the Company (which request shall set forth the amount of Registrable Securities for which registration is requested), and the Company shall include in such Registration Statement all such Registrable Securities so requested to be included therein. (d) The number, percentage, fraction or kind of shares referred to in this Section 4 shall be appropriately adjusted for any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution in respect of the shares of Common Stock. (e) The Company, and any other holder of the Company's securities who has registration rights, may include its securities in the Shelf Registration effected pursuant to this Section 4. - 6 - Section 5. Piggyback Registration. If, on or prior to the tenth anniversary of the date of this Agreement, the Company at any time proposes to file a registration statement with respect to any equity securities, whether for its own account (other than in connection with any Registration Statement contemplated by Sections 3 or 4 or a registration statement on Form S-4 or S-8 (or any successor or substantially similar form), or in connection with (A) an employee stock option, stock purchase or compensation plan or securities issued or issuable pursuant to any such plan, or (B) a dividend reinvestment plan) (any of the foregoing, a "Company Registration") or for the account of a holder of securities of the Company pursuant to demand registration rights granted by the Company (a "Requesting Securityholder"), other than for the registration of securities for sale on a non-underwritten continuous or delayed basis pursuant to Rule 415 (a "Requesting Securityholder Registration"), then the Company shall in each case give written notice of such proposed filing to all Holders of Registrable Securities at least twenty (20) Business Days before the anticipated filing date of any such registration statement by the Company, and such notice shall offer to all Holders the opportunity to have any or all of the Registrable Securities held by such Holders included in such registration statement. Each Holder of Registrable Securities desiring to have its Registrable Securities registered under this Section 5 shall so advise the Company in writing within fifteen (15) Business Days after the date of receipt of such notice (which request shall set forth the amount of Registrable Securities for which registration is requested), and the Company shall include in such Registration Statement all such Registrable Securities so requested to be included therein. Notwithstanding the foregoing, if the managing underwriter of any such proposed public offering advises the Company in writing that the total amount or kind of securities which the Holders of Registrable Securities, the Company and any other persons or entities intended to be included in such proposed public offering is sufficiently large or of a type which such managing underwriter believes would adversely affect the success of such proposed public offering, then the amount or kind of securities offered for the account of the following groups of holders shall be reduced pro rata among members of such group in accordance with such managing underwriter's recommendation in the following order of priority: (i) if a registration under this Section 5 is a Company Registration, then the order of priority shall be (with the securities to be reduced first listed first) (A) securities other than Registrable Securities, (B) GP Securities, (C) Registrable Securities other than GP Securities, and (D) securities offered by the Company; and (ii) if a registration under this Section 5 is a Requesting Securityholder Registration, then the order of priority shall be (with the securities to be reduced first listed first) (A) securities offered by the Company, (B) GP Securities, and (C) (x) securities other than Registrable Securities and (y) Registrable Securities other than the GP Securities, pro rata among (x) and (y) collectively in accordance with the number of securities requested to be included therein. Holders exercising their rights under this Section 5 with respect to a Company Registration in which the Company has been able to sell all of the securities it sought to include in such Company Registration (including by means of the underwriter's overallotment option) shall be entitled to sell their Registrable Securities by means of the underwriter's overallotment option to the extent not fully utilized by the Company; provided, however, that the Company will use its commercially reasonable efforts to enable the Holders other than the Post-Closing Sellers to sell Registrable Securities in the overallotment option in connection with the Company's initial public offering and the Company will not sell any shares subject to such option to extent the Holders can do so. Anything to the contrary in this Agreement notwithstanding, the Company may withdraw or postpone a Registration Statement referred to in this Section 5 at any time before it becomes - 7 - effective or withdraw, postpone or terminate the offering after it becomes effective without obligation to the Holder or Holders of the Registrable Securities. Section 6. Registration Procedures. (a) General. In connection with the Company's registration obligations pursuant to Sections 3, 4 and 5 hereof, at its expense, except as provided in Section 8, the Company will, as expeditiously as possible: (i) prepare and file with the SEC a new Registration Statement or such amendments and post-effective amendments to an existing Registration Statement as may be necessary to keep such Registration Statement effective for the time periods set forth in Sections 3(b) or 4(a) (if applicable), provided that no Registration Statement shall be required to remain in effect after all Registrable Securities covered by such Registration Statement have been sold and distributed as contemplated by such Registration Statement, and, provided, further, that as soon as practicable, but in no event later than two Business Days before filing such Registration Statement, any related Prospectus or any amendment or supplement thereto, other than any amendment or supplement made solely as a result of incorporation by reference of documents filed with the SEC subsequent to the filing of such Registration Statement, the Company shall furnish for comment to the Holders of the Registrable Securities covered by such Registration Statement who request to receive such documents and the underwriters, if any, copies of all such documents proposed to be filed, and, except in connection with an offering under Section 5 hereof, shall not file any Registration Statement or amendment or supplement (other than by incorporation) to which the Holders of at least a majority of the Registrable Securities covered by such Registration Statement reasonably object. (ii) notify the selling Holders of Registrable Securities and the managing underwriters, if any, promptly (1) when a new Registration Statement, Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any new Registration Statement or post-effective amendment, when it has become effective, (2) of any request by the SEC for amendments or supplements to any Registration Statement or Prospectus or for additional information, (3) of the issuance by the SEC of any comments with respect to any filing and of the Company's responses thereto, (4) of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose, (5) of any suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (6) of the happening of any event which makes any statement of a material fact made in any Registration Statement, Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in any Registration Statement, Prospectus or any document incorporated therein by reference in order to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading; (iii) if reasonably requested by the managing underwriter or underwriters or a Holder of Registrable Securities being sold in connection with an - 8 - Underwritten Offering, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters or the Holders of a majority of the Registrable Securities (on a Common Stock equivalent basis) being sold in such Underwritten Offering agree should be included therein relating to the sale of the Registrable Securities, including, without limitation, information with respect to the aggregate number of shares of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the Underwritten Offering of the Registrable Securities to be sold in such offering; and promptly make all required filings of such Prospectus supplement or post-effective amendment; (iv) furnish to each selling Holder of Registrable Securities and each managing underwriter, if any, without charge, as many conformed copies as may reasonably be requested, of the then effective Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (v) deliver to each selling Holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the then effective Prospectus (including each prospectus subject to completion) and any amendments or supplements thereto as such Persons may reasonably request; (vi) use commercially reasonable efforts to register or qualify or cooperate with the selling Holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any selling Holder of Registrable Securities or underwriter reasonably requests in writing and to keep such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to do all other acts or things reasonably necessary or advisable to enable the disposition in such distributions of the securities covered by the applicable Registration Statement; provided, however, that the Company will not be required to (1) qualify to do business in any jurisdiction where it would not otherwise be required to qualify, but for this paragraph (vi), (2) subject itself to general taxation in any such jurisdiction or (3) file a general consent to service of process in any such jurisdiction; (vii) cooperate with the selling Holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two Business Days prior to any sale of Registrable Securities to the underwriters; (viii) cause all Registrable Securities covered by the Registration Statement to be listed on each securities exchange (or quotation system operated by a national securities association) on which identical securities issued by the Company are - 9 - then listed if requested by the Holders of a majority of the Registrable Securities covered by such Registration Statement or the managing underwriters, if any, and enter into customary agreements including, if necessary, a listing application and indemnification agreement in customary form, and provide a transfer agent for such Registrable Securities no later than the effective date of such Registration Statement; (ix) provide a CUSIP number for the Registrable Securities no later than the effective date of such Registration Statement; (x) use commercially reasonable efforts to prevent the happening of any event of the kinds described in clauses (4), (5) and (6) of Section 6(a)(ii); (xi) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC relating to such registration and the distribution of the securities being offered and make generally available to its securities holders, as soon as reasonably practicable, earnings statements satisfying the provisions of Section 11(a) of the Securities Act; (xii) cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc.; (xiii) subject to the proviso in paragraph (vi) above, cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities (other than as may be required by the governmental agencies or authorities of any foreign jurisdiction and other than as may be required by a law applicable to a selling Holder by reason of its own activities or business other than the sale of Registrable Securities); (xiv) use all commercially reasonable efforts to take all other steps necessary to effect the registration of the Registrable Securities covered by the Registration Statement contemplated hereby; and (xv) subject to Section 4(b) in connection with an underwritten offering, the Company will participate, to the extent reasonably requested by the managing underwriter, in customary efforts to sell the Registrable Securities under the offering, including, without limitation, participating in "road shows." The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request and as shall be required in connection with any registration referred to herein. (b) Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6(a)(ii), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the then current Prospectus until (1) such Holder is advised - 10 - in writing by the Company that a new Registration Statement covering the offer of Registrable Securities has become effective under the Securities Act or (2) such Holder receives copies of a supplemented or amended Prospectus contemplated by this Section 6(b), or until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed. If the Company shall have given any such notice during a period when a demand registration is in effect, the Company shall extend the period described in Section 3(b)(i) or 4(a)(i) (as applicable) by the number of days during which any such disposition of Registrable Securities is discontinued pursuant to this paragraph. If so directed by the Company, on the happening of such event, the Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. (d) Selection of Underwriters. With respect to any Underwritten Offering undertaken pursuant to Section 3, the Company shall be entitled to select the managing underwriter with the consent of the Holder Representative, and the Holder Representative shall be entitled to select a co-managing underwriter with the consent of the Company, such consent not to be unreasonably withheld or delayed in each case. With respect to any Company Registration as to which Holders have exercised registration rights under Section 5, the Holder Representative shall be entitled to select a co-managing underwriter with the consent of the Company, such consent not to be unreasonably withheld or delayed. Section 7. Holdback Agreements. (a) Hold-Back Election. Except to the extent they sell shares with respect to the overallotment option in connection with the Company's initial public offering, in the case of the registration of any underwritten primary offering initiated by the Company (other than any registration by the Company on Form S-4 or Form S-8 (or any successor or substantially similar form), or in connection with (A) an employee stock option, stock purchase or compensation plan or of securities issued or issuable pursuant to any such plan, or (B) a dividend reinvestment plan) or any underwritten secondary offering initiated at the request of a holder of securities of the Company pursuant to registration rights granted by the Company, upon the request of the managing underwriter, each Holder of 5% or more of the outstanding shares of Common Stock agrees not to effect any public sale or distribution of Registrable Securities except as part of such underwritten registration, during the period beginning fifteen (15) days prior to the closing date of such underwritten offering and during the period ending on ninety (90) days after such closing date (or such longer period, not to exceed 180 days, as may be reasonably requested by the Company or by the managing underwriter or underwriters). In the event that such Holders are required to refrain from selling Registrable Securities pursuant to this Section 7(a) during the required registration period under Section 4 hereof, the period set forth in Section 4(a)(i) hereof shall be extended by the number of days during such required registration period that the Holders were required to refrain from selling Registrable Securities pursuant to this Section 7(a). (b) Material Development Condition. With respect to any Registration Statement filed or to be filed pursuant to Section 3 or 4, if the Company determines that, in its good faith judgment, it would (because of the existence of, or in anticipation of, any acquisition or corporate reorganization or other transaction, financing activity, stock repurchase or development involving the Company or any subsidiary, or the unavailability for reasons - 11 - substantially beyond the Company's control of any required financial statements, or any other event or condition of similar significance to the Company or any subsidiary) be seriously detrimental (a "Material Development Condition") to the Company or any subsidiary or its stockholders for such a Registration Statement to become effective or to be maintained effective or for sales of Registrable Securities to continue pursuant to the Registration Statement, the Company shall, notwithstanding any other provisions of this Agreement, be entitled, upon the giving of a written notice (a "Delay Notice") to such effect, signed by the President or any Vice President of the Company, to any Holder of Registrable Securities included or to be included in such Registration Statement, (i) to cause sales of Registrable Securities by such Holder pursuant to such Registration Statement to cease, (ii) to delay actions to bring about the effectiveness of such Registration Statement and sales thereunder or, upon the written advice of counsel, cause such Registration Statement to be withdrawn and the effectiveness of such Registration Statement terminated, or (iii) in the event no such Registration Statement has yet been filed, to delay filing any such Registration Statement, until, in the good faith judgment of the Company, such Material Development Condition no longer exists (notice of which the Company shall promptly deliver to any Holder of Registrable Securities with respect to which any such Registration Statement has been filed). Notwithstanding the foregoing provisions of this paragraph (b): (1) the Company shall not be entitled to cause sales of Registrable Securities to cease or to delay any registration of Registrable Securities required pursuant to Section 3 or 4 by reason of any existing or anticipated Material Development Condition more than a total of four times or for a period of more than an aggregate of ninety (90) days within any consecutive three hundred sixty-five (365) day period, as above provided; (2) in the event a Registration Statement is filed and subsequently withdrawn by reason of any existing or anticipated Material Development Condition as hereinbefore provided, the Company shall cause a new Registration Statement covering the Registrable Securities to be filed with the SEC as soon as such Material Development Condition expires or, if sooner, upon the expiration of such ninety (90) day period, and the registration period for such new registration statement shall be the greater of thirty (30) days or the number of days that remained in the required registration period with respect to the withdrawn Registration Statement at the time it was withdrawn; and (3) in the event the Company elects not to withdraw or terminate the effectiveness of any such Registration Statement but to cause a Holder or Holders to refrain from selling Registrable Securities pursuant to such Registration Statement for any period during the required registration period, such required registration period with respect to such Holders shall be extended by the number of days during such required registration period that such Holders are required to refrain from selling Registrable Securities. (c) Limitation on Demand, Shelf and Piggyback Registration Rights. Anything to the contrary contained in this Agreement notwithstanding, when in the written opinion of counsel for the Company (which counsel shall be experienced in securities law matters) delivered to the Holders, registration of the Registrable Securities is not required by the Securities Act and other applicable securities laws in connection with a proposed sale of such Registrable Securities under Rule 144 of the Securities Act, the Holder shall have no rights pursuant to Sections 3, 4, or 5 hereof, to request a registration in connection with such proposed sale; provided, however, if counsel for the Holder(s) of Registrable Securities reasonably disagrees in its own written opinion delivered to the Company with such written opinion of counsel for the Company, the foregoing limitation on registration rights shall be of no force or effect. - 12 - Section 8. Registration Expenses. All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all registration and filing fees, listing fees, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications or registrations (or the obtaining of exemptions therefrom) of the Registrable Securities), fees of the National Association of Securities Dealers, transfer and registration fees of transfer agents and registrars, printing expenses (including expenses of printing Prospectuses), messenger and delivery expenses, internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), fees and disbursements of its counsel and its independent certified public accountants (including expenses of any special audit or accounting review), securities acts liability insurance (if the Company elects to obtain such insurance), fees and expenses of any special experts retained by the Company in connection with any registration, hereunder reasonable fees and expenses, not to exceed $30,000, of one counsel for the Holders (and any appropriate local counsel) and fees and expenses of other Persons retained by the Company (all such expenses being referred to as "Registration Expenses"), shall be borne by the Company; provided, that Registration Expenses shall not include out-of-pocket expenses incurred by the Holders and underwriting discounts, commissions or fees attributable to the sale of the Registrable Securities, which shall be paid by the Holders pro rata on the basis of the number of shares registered on their behalf. Section 9. Indemnification. (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, but without duplication, each Holder of Registrable Securities, its officers, directors, employees, partners, principals, equity holders, managed or advised accounts, advisors and agents, and each Person who controls such Holder (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and reasonable legal fees and expenses and including expenses incurred in settlement of any litigation, commenced or threatened) resulting from any untrue statement (or alleged untrue statement) of a material fact in, or any omission (or alleged omission) of a material fact required to be stated in, any Registration Statement or Prospectus or necessary to make the statements therein (in the case of a Prospectus in light of the circumstances under which they were made) not misleading or any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, as such expenses are incurred, except insofar as the same are caused by or contained in any information furnished in writing to the Company by any Holder or any underwriters expressly for use therein. The Company will also indemnify underwriters participating in the distribution, their officers, directors, employees, partners and agents, and each Person who controls such underwriters (within the meaning of the Securities Act), to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities, if so requested. (b) Indemnification by Holders of Registrable Securities. In connection with any Registration Statement in which a Holder of Registrable Securities is participating, each such Holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and agrees to indemnify and hold harmless, to the full extent permitted by law, but without - 13 - duplication, the Company, its officers, directors, shareholders, employees, advisors and agents, and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and reasonable legal fees and expenses and including expenses incurred in settlement of any litigation, commenced or threatened) resulting from any untrue statement (or alleged untrue statement) of material fact in, or any omission (or alleged omission) of a material fact required to be stated in, the Registration Statement or Prospectus or necessary to make the statements therein (in the case of a Prospectus in light of the circumstances under which they were made) not misleading or any violation by such Holder of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to such Holder in connection with any such registration, as such expenses are incurred, to the extent, but only to the extent, that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder to the Company specifically for inclusion therein. The Company and the other persons described above shall be entitled to receive indemnities from underwriters participating in the distribution, to the same extent as provided above with respect to information so furnished in writing by such Persons specifically for inclusion in any Prospectus or Registration Statement. In no event shall any participating Holder be liable for any amount in excess of the net proceeds (net of payment of all expenses) received by such Holder from the Registrable Securities offered and sold by such Holder pursuant to such Registration Statement. (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel of such indemnifying party's choice; provided, however, that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such indemnified Person unless (A) the indemnifying party shall have agreed in writing to pay them, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified party in a timely manner or (C) the named parties to an action, claim or proceeding (including any impleaded parties) include any indemnified party and the indemnifying party or any of its Affiliates and in the reasonable judgment of any such Person, based upon advice of its counsel, (1) a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person) or (2) there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party; provided, that such counsel only be hired to the extent necessary for such defense or defenses; and further provided, that the indemnifying party shall be responsible to pay the fees and expenses of only one law firm plus one local counsel in each necessary jurisdiction pursuant to these clauses (A), (B) and (C). The indemnifying party will not be subject to any liability for any settlement made without its written consent. No indemnified party will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of - 14 - the claim will not be obligated to pay the fees and expenses of more than one counsel (plus one local counsel if required in a specific instance) for all parties indemnified by such indemnifying party with respect to such claim. The failure by an indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section 9, except to the extent the failure to give such notice is materially prejudicial to the indemnifying party's ability to defend such action. (d) Contribution. If for any reason the indemnification provided for in Section 9(a) or Section 9(b) is unavailable to an indemnified party or insufficient to hold it harmless as contemplated by Section 9(a) and Section 9(b), then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the indemnifying party or parties on the one hand or the indemnified party on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentations. In no event shall any participating Holder be required to contribute any amount in excess of the net proceeds (net of payment of all expenses) received by such Holder from the Registrable Securities offered and sold by such Holder pursuant to such Registration Statement. In no event shall any participating Holder be liable for any amount in excess of the net proceeds (net of payment of all expenses) received by such Holder from the Registrable Securities offered and sold by such Holder pursuant to such Registration Statement. Section 10. Participation in Underwritten Registrations. No Person may participate in any Underwritten Offering hereunder unless such Person (i) agrees to sell such Person's Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. Nothing in this Section 10 shall be construed to create any additional rights regarding the registration of Registrable Securities in any Person otherwise than as set forth herein. Section 11. Stockholder Rights Plans. The Company shall not implement any Stockholder Rights Plan within four years after the Company's initial public offering without the consent of Holders of a majority of the Registrable Securities that remain Restricted Securities so long as no less than 50% of the original Registrable Securities (and securities issues in respect thereof in connection with any stock dividend, stock split or reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution) remain Registrable Securities that are Restricted Securities. - 15 - Section 12. Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights (a) any terms of which are inconsistent with the registration rights granted to the Holders hereunder or (b) pursuant to which such holder or prospective holder may make a demand for registration until the earlier of (i) the date on which the Holders have made two demands under Section 3 hereof and (ii) two years following the Company's initial public offering. Section 13. Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the restricted securities to the public without registration, the Company agrees to use its commercially reasonable efforts to: (a) make and keep public information regarding the Company available as those terms and understood and defined in Rule 144 under the Securities Act, at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public; (b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time it has become subject to such reporting requirements; and (c) so long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as a Holder may reasonably request in availing itself to any rule or regulation of the Commission allowing a Holder to sell any such securities without registration. Section 14. Amendments and Waivers. The provisions of this Agreement, including the provisions of this Section 14, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless (a) with respect to a particular offering hereunder, the Company has obtained the written consent of Holders of a majority of the Registrable Securities (on a Common Stock equivalent basis) that have a right to be included in such offering and are then outstanding as determined by the Company or of the Holder Representative or (b) in any other event, the Company has obtained the written consent of Holders of a majority of the Registrable Securities (on a Common Stock equivalent basis) then outstanding as determined by the Company and so long as the effect thereof will be that the consenting Holders will not be treated more favorably than all other Holders. Whenever the consent or approval of Holders of a specified number of Registrable - 16 - Securities is required hereunder, Registrable Securities held by the Company shall not be counted in determining whether such consent or approval was given by the Holders of such required number. Section 15. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telecopier, or air-courier guaranteeing overnight delivery: (a) If to a Holder of Registrable Securities, initially at the address set forth below such Holder's signature in the Contribution Agreement and thereafter at such other address as may be designated from time to time by notice given in accordance with the provisions of this Section 15. (b) If to the Company, initially at 35 West 56th St., New York, New York 10019, attention: President; telecopier no. (212) 763-5602; confirm no. (212) 763-5600, with a copy to Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New York 10022, attention: Thomas E. Molner, Esq. and thereafter at such other address as may be designated from time to time by notice given in accordance with the provisions of this Section 13. (c) All such notices and other communications shall be deemed to have been delivered and received (i) in the case of personal delivery, telecopier or telegram, on the date of such delivery, (ii) in the case of overnight air courier, on the Business Day after the date when sent and (iii) in the case of mailing, on the third Business Day following such mailing. Section 16. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including without limitation and without the need for an express assignment to subsequent Holders of the Registrable Securities who acquire their shares in transactions not involving a registration under the Securities Act or a sale of shares in the public markets; provided, that the transferee or assignee of such rights assumes in writing the obligations of such transferor under the Agreement. Section 17. Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 18. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Section 19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b). - 17 - Section 20. Jurisdiction; Forum. Each party hereto consents and submits to the jurisdiction of any state court sitting in the County of New York or federal court sitting in the Southern District of the State of New York in connection with any dispute arising out of or relating to this Agreement. Each party hereto waives any objection to the laying of venue in such courts and any claim that any such action has been brought in an inconvenient forum. To the extent permitted by law, any judgment in respect of a dispute arising out of or relating to this Agreement may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of such judgment being conclusive evidence of the fact and amount of such judgment. Each party hereto agrees that personal service of process may be effected by any of the means specified in Section 13, addressed to such party. The foregoing shall not limit the rights of any party to serve process in any other manner permitted by law. Section 21. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. Section 22. Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. [Remainder of Page Intentionally Left Blank] - 18 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. GENERAL MARITIME SHIP HOLDINGS LTD. By:_________________________________ Name: Title: THE SECURITYHOLDERS: ____________________________________ - 19 - Schedule 1 Securityholders - 20 - Schedule 2 Acquisition Agreements 1. Contribution Agreement dated as of _________, 2001 by and among the Company, Ajax Limited Partnership, the Limited Partners of Ajax Limited Partnership, Peter C. Georgiopoulos, [MGP Stockholder], Genmar Ajax Corporation, and GMC Administration Ltd. 2. Contribution Agreement dated as of _________, 2001 by and among the Company, Ajax II, L.P., OCM Ajax Investments, Inc., Peter C. Georgiopoulos, [MGP Stockholder], Genmar Ajax II Corporation, and GMC Administration Ltd. 3. Contribution Agreement dated as of _________, 2001 by and among the Company, Boss, L.P., the Limited Partners of Boss, L.P., Peter C. Georgiopoulos, [MGP Stockholder], Genmar Boss Corporation, and GMC Administration Ltd. 4. Contribution Agreement dated as of _________, 2001 by and among the Company, General Maritime I, L.P., the Limited Partners of General Maritime I, L.P., Peter C. Georgiopoulos, [MGP Stockholder], General Maritime I Corporation, and GMC Administration Ltd. 5. Contribution Agreement dated as of _________, 2001 by and among the Company, General Maritime II, L.P., the Limited Partners of General Maritime II, L.P., Peter C. Georgiopoulos, [MGP Stockholder], General Maritime II Corporation, and GMC Administration Ltd. 6. Contribution Agreement dated as of _________, 2001 by and among the Company, Harriet, L.P., the Limited Partners of Harriet, L.P., Peter C. Georgiopoulos, [MGP Stockholder], General Harriet Corporation, and GMC Administration Ltd. 7. Contribution Agreement dated as of _________, 2001 by and among the Company, Pacific Tankship, L.P., the Limited Partners of Pacific Tankship, L.P., Peter C. Georgiopoulos, [MGP Stockholder], Genmar Pacific Ltd., and GMC Administration Ltd. 8. Contribution Agreement dated as of _________, 2001 by and among the Company, Genmar Alexandra, LLC, Genmar II LLC, Equili Company, L.P., Equili Company, LLC, Equili Company II, L.P. and Equili Company II, LLC. 9. Vessel Contribution Agreement dated as of ___________, 2001, by and among the Company and Bylstad Shipholding Inc., Liberia. 10. Vessel Contribution Agreement dated as of ___________, 2001, by and among the Company and KS Stavanger Prince. - 21 - EX-10.33 20 a2050304zex-10_33.txt EXHIBIT 10.33 Exhibit 10.33 GENERAL MARITIME CORPORATION 2001 STOCK INCENTIVE PLAN ARTICLE I General 1.1 Purpose The General Maritime Corporation 2001 Stock Incentive Plan (the "Plan") is designed to provide certain key persons, on whose initiative and efforts the successful conduct of the business of General Maritime Corporation (formerly known as General Maritime Shipholdings, Ltd., a Marshall Islands Company, prior to its initial public offering) (the "Company") depends, and who are responsible for the management, growth and protection of the business of the Company, with incentives to: (a) enter into and remain in the service of the Company, a Company subsidiary or a Company joint venture, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company (whether directly or indirectly through enhancing the long-term performance of a Company subsidiary or a Company joint venture). The Plan is also designed to provide certain "performance-based" compensation to these key persons. 1.2 Administration (a) Administration by Committee; Constitution of Committee. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Board") or such other committee or subcommittee as the Board may designate or as shall be formed by the abstention or recusal of a non-Qualified Member (as defined below) of such committee (the "Committee"). The members of the Committee shall be appointed by, and serve at the pleasure of, the Board. While it is intended that at all times that the Committee acts in connection with the Plan, the Committee shall consist solely of Qualified Members, the number of whom shall not be less than two, the fact that the Committee is not so comprised will not invalidate any grant hereunder that otherwise satisfies the terms of the Plan. For purposes of the foregoing, a "Qualified Member" is both a "non-employee director" within the meaning of Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934 (the "1934 Act") and an "outside director" within the meaning of section 162(m) of the Internal Revenue Code of 1986 (the "Code"); If the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee. (b) Committee's Authority. The Committee shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and any Grant Certificates executed pursuant to Section 2.1, (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing its own operations, (iv) to make all determinations necessary or advisable in administering the Plan, (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan, and (vi) to amend the Plan to reflect changes in applicable law. (c) Committee Action. Actions of the Committee shall be taken by the vote of a majority of its members. Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken shall be fully as effective as if it had been taken by a vote at a meeting. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities to any person or persons selected by it, and may revoke any such allocation or delegation at any time. (d) Determinations Final. The determination of the Committee on all matters relating to the Plan or any Grant Certificate shall be final, binding and conclusive. (e) Limit on Committee Members' Liability. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any award thereunder. 1.3 Persons Eligible for Awards The persons eligible to receive awards under the Plan are those officers, directors, and executive, managerial, professional or administrative employees of, and consultants to, the Company, its subsidiaries and its joint ventures (collectively, "key persons") as the Committee in its sole discretion shall select. The Committee may from time to time in its sole discretion determine that any key person shall be ineligible to receive awards under the Plan. 1.4 Types of Awards Under Plan Awards may be made under the Plan in the form of (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) dividend equivalent rights, (e) restricted stock, (f) unrestricted stock, and (g) performance shares, all as more fully set forth in Article II. The term "award" means any of the foregoing. No incentive stock option may be granted to a person who is not an employee of the Company on the date of grant. 1.5 Shares Available for Awards (a) Aggregate Number Available; Certificate Legends. The total number of shares of common stock of the Company ("Common Stock") with respect to which awards may be granted pursuant to the Plan shall not exceed 2.1 million shares. Shares issued pursuant to the Plan may be authorized but unissued Common Stock, authorized and issued Common Stock held in the Company's treasury or Common Stock acquired by the Company for the purposes of the Plan. The Committee may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares. (b) Adjustment Upon Changes in Common Stock. Upon certain changes in Common Stock, the number of shares of Common Stock available for issuance with respect to awards that may be granted under the Plan pursuant to Section 1.5(a), shall be adjusted pursuant to Section 3.7(a). (c) Certain Shares to Become Available Again. The following shares of Common Stock shall again become available for awards under the Plan: any shares that are subject to an award under the Plan and that remain unissued upon the cancellation or termination of such award for any reason whatsoever; any shares of restricted stock forfeited pursuant to Section 2.7(e), provided that any dividends paid on such shares are also forfeited pursuant to such Section 2.7(e); and any shares in respect of which a stock appreciation right or performance share award is settled for cash. (d) Individual Limit. Except for the limits set forth in this Section 1.5(d) and in Section 2.2(h), no provision of this Plan shall be deemed to limit the number or value of shares with respect to which the Committee may make awards to any eligible person. Subject to adjustment as provided in Section 3.7(a), the total number of shares of Common Stock with respect to which awards may be granted to any one employee of the Company or a subsidiary during any one calendar year shall not exceed 750,000 shares. Stock options and stock appreciation rights granted and subsequently canceled or deemed to be canceled in a calendar year count against this limit even after their cancellation. 1.6 Definitions of Certain Terms (a) The "Fair Market Value" of a share of Common Stock on any day shall be the closing price on the Nasdaq as reported for such day in The Wall Street Journal or, if no such price is reported for such day, the average of the high bid and low asked price of Common Stock as reported for such day. If no quotation is made for the applicable day, the Fair Market Value of a share of Common Stock on such day shall be determined in the manner set forth in the preceding sentence using quotations for the next preceding day for which there were quotations, provided that such quotations shall have been made within the ten (10) business days preceding the applicable day. Notwithstanding the foregoing, if deemed necessary or appropriate by the Committee, the Fair Market Value of a - 2 - share of Common Stock on any day shall be determined by the Committee. In no event shall the Fair Market Value of any share of Common Stock be less than its par value. (b) The term "incentive stock option" means an option that is intended to qualify for special federal income tax treatment pursuant to sections 421 and 422 of the Code as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Grant Certificate. Any option that is not specifically designated as an incentive stock option shall under no circumstances be considered an incentive stock option. Any option that is not an incentive stock option is referred to herein as a "non-qualified stock option." (c) A grantee shall be deemed to have a "termination of employment" upon (i) the date the grantee ceases to be employed by, or to provide consulting services for, the Company, any Company subsidiary or Company joint venture, or any corporation (or any of its subsidiaries) which assumes the grantee's award in a transaction to which section 424(a) of the Code applies; (ii) the date the grantee ceases to be a Board member; or (iii) in the case of a grantee who is, at the time of reference, both an employee or consultant and a Board member, the later of the dates determined pursuant to subparagraphs (i) and (ii) above. For purposes of clause (i) above, a grantee who continues his employment or consulting relationship with: (A) a Company subsidiary subsequent to its sale by the Company, or (B) a Company joint venture subsequent to the Company's sale of its interests in such joint venture, shall have a termination of employment upon the date of such sale. The Committee may in its discretion determine whether any leave of absence constitutes a termination of employment for purposes of the Plan and the impact, if any, of any such leave of absence on awards theretofore made under the Plan. Such determinations of the Committee shall be final, binding and conclusive. A person whose status changes from consultant to employee or vice versa without interruption shall not be considered to have had a termination of employment by reason of such change, except for purposes of Section 2.5(f). (d) The terms "parent corporation" and "subsidiary corporation" shall have the meanings given them in section 424(e) and (f) of the Code, respectively. (e) The term "employment" shall be deemed to mean an employee's employment with, or a consultant's provision of services to, the Company, any Company subsidiary or any Company joint venture and each Board member's service as a Board member. (f) The term "cause" in connection with a termination of employment by reason of a dismissal for cause shall mean: (i) to the extent that there is an employment, severance or other agreement governing the relationship between the grantee and the Company, a Company subsidiary or a Company joint venture, which agreement contains a definition of "cause," cause shall consist of those acts or omissions that would constitute "cause" under such agreement; and otherwise, (ii) the grantee's termination of employment by the Company or an affiliate on account of any one or more of the following: (A) any failure by the grantee substantially to perform the grantee's employment duties; (B) any excessive unauthorized absenteeism by the grantee; (C) any refusal by the grantee to obey the lawful orders of the Board or any other person or committee to whom the grantee reports; (D) any act or omission by the grantee that is or may be injurious to the Company, monetarily or otherwise; (E) any act by the grantee that is inconsistent with the best interests of the Company; - 3 - (F) the grantee's material violation of any of the Company's policies, including, without limitation, those policies relating to discrimination or sexual harassment; (G) the grantee's unauthorized (a) removal from the premises of the Company or an affiliate of any document (in any medium or form) relating to the Company or an affiliate or the customers or clients of the Company or an affiliate or (b) disclosure to any person or entity of any of the Company's, or its affiliates,' confidential or proprietary information; (H) the grantee's commission of any felony, or any other crime involving moral turpitude; and (I) the grantee's commission of any act involving dishonesty or fraud. Notwithstanding the foregoing, in determining whether a termination of employment by reason of a dismissal for cause has occurred pursuant to Section 1.6(f)(ii) for the purposes of Section 3.8(b)(iii), reference shall be made solely to subsections (C), (F), (G), (H), and (I) of Section 1.6 (f)(ii). Any rights the Company may have hereunder in respect of the events giving rise to cause shall be in addition to the rights the Company may have under any other agreement with a grantee or at law or in equity. Any determination of whether a grantee's employment is (or is deemed to have been) terminated for cause shall be made by the Committee in its discretion, which determination shall be final, binding and conclusive on all parties. If, subsequent to a grantee's voluntary termination of employment or involuntary termination of employment without cause, it is discovered that the grantee's employment could have been terminated for cause, the Committee may deem such grantee's employment to have been terminated for cause. A grantee's termination of employment for cause shall be effective as of the date of the occurrence of the event giving rise to cause, regardless of when the determination of cause is made. ARTICLE II Awards Under The Plan 2.1 Agreements Evidencing Awards Each award granted under the Plan (except an award of unrestricted stock) shall be evidenced by a written certificate ("Grant Certificate") which shall contain such provisions as the Committee may in its sole discretion deem necessary or desirable. By accepting an award pursuant to the Plan, a grantee thereby agrees that the award shall be subject to all of the terms and provisions of the Plan and the applicable Grant Certificate. 2.2 Grant of Stock Options, Stock Appreciation Rights and Dividend Equivalent Rights (a) Stock Option Grants. The Committee may grant incentive stock options and non-qualified stock options (collectively, "options") to purchase shares of Common Stock from the Company, to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Committee shall determine in its sole discretion, subject to the provisions of the Plan. (b) Stock Appreciation Right Grants; Types of Stock Appreciation Rights. The Committee may grant stock appreciation rights to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Committee shall determine in its sole discretion, subject to the provisions of the Plan. The terms of a stock appreciation right may provide that it shall be automatically exercised for a cash payment upon the happening of a specified event that is outside the control of the grantee, and that it shall not be otherwise exercisable. Stock appreciation rights may be granted in connection with all or any part of, or independently of, any option granted under the Plan. A stock appreciation right granted in connection with a non-qualified stock option may be granted at or after the time of grant of such option. A stock appreciation right granted in connection with an incentive stock option may be granted only at the time of grant of such option. (c) Nature of Stock Appreciation Rights. The grantee of a stock appreciation right shall have the right, subject to the terms of the Plan and the applicable Grant Certificate, to receive from the Company an amount - 4 - equal to (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the stock appreciation right over the Fair Market Value of a share of Common Stock on the date of grant (or over the option exercise price if the stock appreciation right is granted in connection with an option), multiplied by (ii) the number of shares with respect to which the stock appreciation right is exercised. Payment upon exercise of a stock appreciation right shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of exercise of the stock appreciation right) or both, all as the Committee shall determine in its sole discretion. Upon the exercise of a stock appreciation right granted in connection with an option, the number of shares subject to the option shall be reduced by the number of shares with respect to which the stock appreciation right is exercised. Upon the exercise of an option in connection with which a stock appreciation right has been granted, the number of shares subject to the stock appreciation right shall be reduced by the number of shares with respect to which the option is exercised. (d) Option Exercise Price. Each Grant Certificate with respect to an option shall set forth the amount (the "option exercise price") payable by the grantee to the Company upon exercise of the option evidenced thereby. The option exercise price per share shall be determined by the Committee in its sole discretion; provided, however, that the option exercise price of an incentive stock option shall be at least 100% of the Fair Market Value of a share of Common Stock on the date the option is granted, and provided further that in no event shall the option exercise price be less than the par value of a share of Common Stock. (e) Exercise Period. Each Grant Certificate with respect to an option or stock appreciation right shall set forth the periods during which the award evidenced thereby shall be exercisable, whether in whole or in part. Such periods shall be determined by the Committee in its sole discretion; provided, however, that no incentive stock option (or a stock appreciation right granted in connection with an incentive stock option) shall be exercisable more than 10 years after the date of grant, and provided further that, except as and to the extent that the Committee may otherwise provide pursuant to Sections 2.5, 3.7 or 3.8, no option or stock appreciation right shall be exercisable prior to the first anniversary of the date of grant. (See the default exercise period provided for under Sections 2.3(a) and (b).) (f) Reload Options. The Committee may in its sole discretion include in any Grant Certificate with respect to an option (the "original option") a provision that an additional option (the "reload option") shall be granted to any grantee who, pursuant to Section 2.3(e)(ii), delivers shares of Common Stock in partial or full payment of the exercise price of the original option. The reload option shall be for a number of shares of Common Stock equal to the number thus delivered, shall have an exercise price equal to the Fair Market Value of a share of Common Stock on the date of exercise of the original option, and shall have an expiration date no later than the expiration date of the original option. In the event that a Grant Certificate provides for the grant of a reload option, such Agreement shall also provide that the exercise price of the original option be no less than the Fair Market Value of a share of Common Stock on its date of grant, and that any shares that are delivered pursuant to Section 2.3 (e) (ii) in payment of such exercise price shall have been held for at least six months. (g) Dividend Equivalent Rights. The Committee may in its sole discretion include in any Grant Certificate with respect to an option, stock appreciation right or performance shares, a dividend equivalent right entitling the grantee to receive amounts equal to the ordinary dividends that would be paid, during the time such award is outstanding and unexercised, on the shares of Common Stock covered by such award if such shares were then outstanding. In the event such a provision is included in a Grant Certificate, the Committee shall determine whether such payments shall be made in cash or in shares of Common Stock, whether they shall be conditioned upon the exercise of the award to which they relate, the time or times at which they shall be made, and such other vesting and forfeiture provisions and other terms and conditions as the Committee shall deem appropriate. Notwithstanding the foregoing, no dividend equivalent rights shall be conditioned on the exercise of any option or stock appreciation right if and to the extent that such dividend equivalent right would cause the compensation represented by such option or stock appreciation right not to constitute performance-based compensation under section 162(m) of the Code. (h) Incentive Stock Option Limitation: Exercisability. To the extent that the aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which incentive stock options are first exercisable by any employee during any calendar year shall exceed $100,000, or such higher amount as may be - 5 - permitted from time to time under section 422 of the Code, such options shall be treated as non-qualified stock options. (i) Incentive Stock Option Limitation: 10% Owners. Notwithstanding the provisions of paragraphs (d) and (e) of this Section 2.2, an incentive stock option may not be granted under the Plan to an individual who, at the time the option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of his employer corporation or of its parent or subsidiary corporations (as such ownership may be determined for purposes of section 422(b) (6) of the Code) unless (i) at the time such incentive stock option is granted the option exercise price is at least 110% of the Fair Market Value of the shares subject thereto and (ii) the incentive stock option by its terms is not exercisable after the expiration of 5 years from the date it is granted. 2.3 Exercise of Options and Stock Appreciation Rights Subject to the other provisions of this Article II, each option or stock appreciation right granted under the Plan shall be exercisable as follows: (a) Beginning of Exercise Period. Unless the applicable Grant Certificate otherwise provides, an option or stock appreciation right shall become exercisable in [equal] installments of __% of the shares subject to such option or stock appreciation right; one installment shall become exercisable on each successive anniversary of the date of grant. (b) End of Exercise Period. Unless the applicable Grant Certificate otherwise provides, once an installment becomes exercisable, it shall remain exercisable until the earlier of (i) the tenth anniversary of the date of grant of the award or (ii) the expiration, cancellation or termination of the award. (c) Timing and Extent of Exercise. Unless the applicable Grant Certificate otherwise provides, an option or stock appreciation right may be exercised from time to time as to all or part of the shares as to which such award is then exercisable. A stock appreciation right granted in connection with an option may be exercised at any time when, and to the same extent that, the related option may be exercised. (d) Notice of Exercise. An option or stock appreciation right shall be exercised by the filing of a written notice with the Company or the Company's designated exchange agent (the "exchange agent"), on such form and in such manner as the Committee shall in its sole discretion prescribe. (e) Payment of Exercise Price. Any written notice of exercise of an option shall be accompanied by payment for the shares being purchased. Such payment shall be made: (i) by certified or official bank check (or the equivalent thereof acceptable to the Company or its exchange agent) for the full option exercise price; or (ii) with the consent of the Committee, by delivery of shares of Common Stock having a Fair Market Value (determined as of the exercise date) equal to all or part of the option exercise price and a certified or official bank check (or the equivalent thereof acceptable to the Company or its exchange agent) for any remaining portion of the full option exercise price; or (iii) at the discretion of the Committee and to the extent permitted by law, by such other provision, consistent with the terms of the Plan, as the Committee may from time to time prescribe (whether directly or indirectly through the exchange agent). (f) Delivery of Certificates Upon Exercise. Promptly after receiving payment of the full option exercise price, or after receiving notice of the exercise of a stock appreciation right for which payment will be made partly or entirely in shares, the Company or its exchange agent shall, subject to the provisions of Section 3.2, deliver to the grantee or to such other person as may then have the right to exercise the award, a certificate or certificates for the shares of Common Stock for which the award has been exercised. If the method of payment employed upon option exercise so requires, and if applicable law permits, an optionee may direct the Company, or its exchange agent as the case may be, to deliver the stock certificate(s) to the optionee's stockbroker. (g) No Stockholder Rights. No grantee of an option or stock appreciation right (or other person having the right to exercise such award) shall have any of the rights of a stockholder of the Company with respect to shares subject to such award until the issuance of a stock certificate to such person for such shares. Except as - 6 - otherwise provided in Section 1.5(b), no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued. 2.4 Compensation in Lieu of Exercise of an Option Upon written application of the grantee of an option, the Committee may in its sole discretion determine to substitute, for the exercise of such option, compensation to the grantee not in excess of the difference between the option exercise price and the Fair Market Value of the shares covered by such written application on the date of such application. Such compensation may be in cash, in shares of Common Stock, or both, and the payment thereof may be subject to conditions, all as the Committee shall determine in its sole discretion. In the event compensation is substituted pursuant to this Section 2.4 for the exercise, in whole or in part, of an option, the number of shares subject to the option shall be reduced by the number of shares for which such compensation is substituted. 2.5 Termination of Employment; Death Subsequent to a Termination of Employment (a) General Rule. Except to the extent otherwise provided in paragraphs (b), (c), (d) or (e) of this Section 2.5 or Section 3.8(b)(iii), a grantee who incurs a termination of employment may exercise any outstanding option or stock appreciation right on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the award on the termination of employment date; and (ii) exercise must occur within three months after termination of employment but in no event after the original expiration date of the award. (b) Dismissal for Cause; Resignation. If a grantee incurs a termination of employment as the result of a dismissal for cause or resignation without the Company's prior consent, all options and stock appreciation rights not theretofore exercised shall terminate upon the grantee's termination of employment. (c) Retirement. If a grantee incurs a termination of employment as the result of his retirement, then any outstanding option or stock appreciation right shall be exercisable on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the award on the termination of employment date; and (ii) exercise must occur by the earlier of (A) the third anniversary of such termination of employment, or (B) the original expiration date of the award. For this purpose "retirement" shall mean a grantee's termination of employment, under circumstances other than those described in paragraph (b) above, on or after: [(x) his 65th birthday, (y) the date on which he has attained age 60 and completed at least five years of service with the Company (using any method of calculation the Committee deems appropriate) or (z) if approved by the Committee, on or after he has completed at least 20 years of service.] (d) Disability. If a grantee incurs a termination of employment by reason of a disability (as defined below), then any outstanding option or stock appreciation right shall be exercisable on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the award on such termination of employment; and (ii) exercise must occur by the earlier of (A) the first anniversary of the grantee's termination of employment, or (B) the original expiration date of the award. For this purpose "disability" shall mean: (x) except in connection with an incentive stock option, any physical or mental condition that would qualify a grantee for a disability benefit under the long-term disability plan maintained by the Company or, if there is no such plan, a physical or mental condition that prevents the grantee from performing the essential functions of the grantee's position (with or without reasonable accommodation) for a period of six consecutive months and (y) in connection with an incentive stock option, a disability described in section 422(c)(6) of the Code. The existence of a disability shall be determined by the Committee in its absolute discretion. (e) Death. (i) Termination of Employment as a Result of Grantee's Death. If a grantee incurs a termination of employment as the result of his death, then any outstanding option or stock appreciation right shall be exercisable on the following terms and conditions: (A) exercise may be made only to the extent that the grantee was entitled to exercise the award on such termination of employment; and (B) - 7 - exercise must occur by the earlier of (1) the first anniversary of the grantee's termination of employment, or (2) the original expiration date of the award. (ii) Death Subsequent to a Termination of Employment. If a grantee dies subsequent to incurring a termination of employment but prior to the expiration of the exercise period with respect to a non-qualified stock option or a stock appreciation right (as provided by paragraphs (a), (c), or (d) above), then the award shall remain exercisable until the earlier to occur of (A) the first anniversary of the grantee's date of death or (B) the original expiration date of the award. (iii) Restrictions on Exercise Following Death. Any such exercise of an award following a grantee's death shall be made only by the grantee's executor or administrator or other duly appointed representative reasonably acceptable to the Committee, unless the grantee's will specifically disposes of such award, in which case such exercise shall be made only by the recipient of such specific disposition. If a grantee's personal representative or the recipient of a specific disposition under the grantee's will shall be entitled to exercise any award pursuant to the preceding sentence, such representative or recipient shall be bound by all the terms and conditions of the Plan and the applicable Grant Certificate which would have applied to the grantee including, without limitation, the provisions of Sections 3.2 and 3.8 hereof. (f) Special Rules for Incentive Stock Options. No option that remains exercisable for more than three months following a grantee's termination of employment for any reason other than death or disability, or for more than one year following a grantee's termination of employment as the result of his becoming disabled, may be treated as an incentive stock option. (g) Committee Discretion. The Committee, in the applicable Grant Certificate, may waive or modify the application of the foregoing provisions of this Section 2.5. 2.6 Transferability of Options and Stock Appreciation Rights Except as otherwise provided in an applicable Grant Certificate evidencing an option or stock appreciation right, during the lifetime of a grantee, each option or stock appreciation right granted to a grantee shall be exercisable only by the grantee and no option or stock appreciation right shall be assignable or transferable otherwise than by will or by the laws of descent and distribution. The Committee may, in any applicable Grant Certificate evidencing an option (other than an incentive stock option to the extent inconsistent with the requirements of section 422 of the Code applicable to incentive stock options), permit a grantee to transfer all or some of the options to (A) the grantee's spouse, children or grandchildren ("Immediate Family Members"), (B) a trust or trusts for the exclusive benefit of such Immediate Family Members, or (C) other parties approved by the Committee in its absolute discretion. Following any such transfer, any transferred options shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer. 2.7 Grant of Restricted Stock (a) Restricted Stock Grants. The Committee may grant restricted shares of Common Stock to such key persons, in such amounts, and subject to such vesting and forfeiture provisions and other terms and conditions as the Committee shall determine in its sole discretion, subject to the provisions of the Plan. Restricted stock awards may be made independently of or in connection with any other award under the Plan. A grantee of a restricted stock award shall have no rights with respect to such award unless such grantee accepts the award within such period as the Committee shall specify by accepting delivery of a restricted stock agreement in such form as the Committee shall determine and, in the event the restricted shares are newly issued by the Company, makes payment to the Company or its exchange agent by certified or official bank check (or the equivalent thereof acceptable to the Company) in an amount at least equal to the par value of the shares covered by the award. (b) Issuance of Stock Certificate(s). Promptly after a grantee accepts a restricted stock award, the Company or its exchange agent shall issue to the grantee a stock certificate or stock certificates for the shares of Common Stock covered by the award or shall establish an account evidencing ownership of the stock in uncertificated form. Upon the issuance of such stock certificate(s), or establishment of such account, the grantee - 8 - shall have the rights of a stockholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and forfeiture provision described in paragraphs (d) and (e) of this Section 2.7; (ii) in the Committee's discretion, to a requirement that any dividends paid on such shares shall be held in escrow until all restrictions on such shares have lapsed; and (iii) any other restrictions and conditions contained in the applicable restricted stock agreement. (c) Custody of Stock Certificate(s). Unless the Committee shall otherwise determine, any stock certificates issued evidencing shares of restricted stock shall remain in the possession of the Company until such shares are free of any restrictions specified in the applicable restricted stock agreement. The Committee may direct that such stock certificate(s) bear a legend setting forth the applicable restrictions on transferability. (d) Nontransferability. Shares of restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable restricted stock agreement. The Committee at the time of grant shall specify the date or dates (which may depend upon or be related to the attainment of performance goals and other conditions) on which the nontransferability of the restricted stock shall lapse. (e) Consequence of Termination of Employment. A grantee's termination of employment for any reason (including death) shall cause the immediate forfeiture of all shares of restricted stock that have not yet vested as of the date of such termination of employment. All dividends paid on such shares also shall be forfeited, whether by termination of any escrow arrangement under which such dividends are held, by the grantee's repayment of dividends he received directly, or otherwise. 2.8 Grant of Unrestricted Stock The Committee may grant (or sell at a purchase price at least equal to par value) shares of Common Stock free of restrictions under the Plan, to such key persons and in such amounts and subject to such forfeiture provisions as the Committee shall determine in its sole discretion. Shares may be thus granted or sold in respect of past services or other valid consideration. 2.9 Grant of Performance Shares (a) Performance Share Grants. The Committee may grant performance share awards to such key persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Committee shall in its sole discretion determine, subject to the provisions of the Plan. Such an award shall entitle the grantee to acquire shares of Common Stock, or to be paid the value thereof in cash, as the Committee shall determine, if specified performance goals are met. Performance shares may be awarded independently of, or in connection with, any other award under the Plan. A grantee shall have no rights with respect to a performance share award unless such grantee accepts the award by accepting delivery of a Grant Certificate at such time and in such form as the Committee shall determine. (b) Stockholder Rights. The grantee of a performance share award will have the rights of a stockholder only as to shares for which a stock certificate has been issued pursuant to the award and not with respect to any other shares subject to the award. (c) Consequence of Termination of Employment. Except as may otherwise be provided by the Committee at any time prior to a grantee's termination of employment, the rights of a grantee of a performance share award shall automatically terminate upon the grantee's termination of employment by the Company and its subsidiaries for any reason (including death). (d) Exercise Procedures; Automatic Exercise. At the discretion of the Committee, the applicable Grant Certificate may set out the procedures to be followed in exercising a performance share award or it may provide that such exercise shall be made automatically after satisfaction of the applicable performance goals. - 9 - (e) Tandem Grants; Effect on Exercise. Except as otherwise specified by the Committee, (i) a performance share award granted in tandem with an option may be exercised only while the option is exercisable, (ii) the exercise of a performance share award granted in tandem with any other award shall reduce the number of shares subject to such other award in the manner specified in the applicable Grant Certificate, and (iii) the exercise of any award granted in tandem with a performance share award shall reduce the number of shares subject to the latter in the manner specified in the applicable Grant Certificate. (f) Nontransferability. Performance shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as otherwise specifically provided in this Plan or the applicable Grant Certificate. The Committee at the time of grant shall specify the date or dates (which may depend upon or be related to the attainment of performance goals and other conditions) on which the nontransferability of the performance shares shall lapse. ARTICLE III Miscellaneous 3.1 Amendment of the Plan; Modification of Awards (a) Amendment of the Plan. The Board may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever, except that no such amendment shall materially impair any rights or materially increase any obligations under any award theretofore made under the Plan without the consent of the grantee (or, upon the grantee's death, the person having the right to exercise the award). For purposes of this Section 3.1, any action of the Board or the Committee that in any way alters or affects the tax treatment of any award shall not be considered to materially impair any rights of any grantee. (b) Stockholder Approval Requirement. Stockholder approval shall be required with respect to any amendment to the Plan which (i) increases the aggregate number of shares which may be issued pursuant to incentive stock options or changes the class of employees eligible to receive such options; or (ii) materially increases the benefits under the Plan to persons whose transactions in Common Stock are subject to section 16(b) of the 1934 Act or increases the benefits under the Plan to someone who is, or who is anticipated to be a "162(m) covered employee" (as defined in Section 3.9(a)(i)), materially increases the number of shares which may be issued to such persons, or materially modifies the eligibility requirements affecting such persons. (c) Modification of Awards. The Committee may cancel any award under the Plan. The Committee also may amend any outstanding Grant Certificate, including, without limitation, by amendment which would: (i) accelerate the time or times at which the award becomes unrestricted or may be exercised, provided that, except as and to the extent that the Committee may otherwise provide pursuant to Section 2.5, 3.7 or 3.8, no option or stock appreciation right shall be exercisable prior to the first anniversary of its date of grant; (ii) waive or amend any goals, restrictions or conditions set forth in the Agreement; or (iii) waive or amend the operation of Section 2.5 with respect to the termination of the award upon termination of employment. However, any such cancellation or amendment (other than an amendment pursuant to Sections 3.7 or 3.8(b)) that materially impairs the rights or materially increases the obligations of a grantee under an outstanding award shall be made only with the consent of the grantee (or, upon the grantee's death, the person having the right to exercise the award). 3.2 Consent Requirement (a) No Plan Action without Required Consent. If the Committee shall at any time determine that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (each such action being hereinafter referred to as a "Plan Action"), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee. (b) Consent Defined. The term "Consent" as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any - 10 - federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Committee shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies. 3.3 Nonassignability Except as provided in Sections 2.5(e), 2.6, 2.7(d) and 2.9(f): (a) no award or right granted to any person under the Plan or under any Grant Certificate shall be assignable or transferable other than by will or by the laws of descent and distribution; and (b) all rights granted under the Plan or any Grant Certificate shall be exercisable during the life of the grantee only by the grantee or the grantee's legal representative. 3.4 Requirement of Notification of Election Under Section 83(b) of the Code If any grantee shall, in connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under section 83(b) of the Code (i.e., an election to include in gross income in the year of transfer the amounts specified in section 83(b) ), such grantee shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under the authority of Code section 83(b). 3.5 Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code Each Grant Certificate with respect to an incentive stock option shall require the grantee to notify the Company of any disposition of shares of Common Stock issued pursuant to the exercise of such option under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition. 3.6 Withholding Taxes (a) With Respect to Cash Payments. Whenever cash is to be paid pursuant to an award under the Plan, the Company shall be entitled to deduct therefrom an amount sufficient in its opinion to satisfy all federal, state and other governmental tax withholding requirements related to such payment. (b) With Respect to Delivery of Common Stock. Whenever shares of Common Stock are to be delivered pursuant to an award under the Plan, the Company shall be entitled to require as a condition of delivery that the grantee remit to the Company an amount sufficient in the opinion of the Company to satisfy all federal, state and other governmental tax withholding requirements related thereto. With the approval of the Committee, which the Committee shall have sole discretion whether or not to give, the grantee may satisfy the foregoing condition by electing to have the Company withhold from delivery shares having a value equal to the amount of tax to be withheld. Such shares shall be valued at their Fair Market Value as of the date on which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an award. 3.7 Adjustment Upon Changes in Common Stock (a) Shares Available for Grants. In the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or split, reverse stock split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change, the maximum number of shares of Common Stock with respect to which the Committee may grant awards under Article II hereof, as described in Section 1.5(a), and the individual annual limit described in Section 1.5(d), shall be appropriately adjusted by the Committee. In the event of any change in the number of shares of Common Stock outstanding by reason of any other event or transaction, the Committee may, but need not, make such adjustments in the number and class of shares of Common Stock with respect to which awards: (i) may be granted under Article II hereof and (ii) granted to any one employee of the Company or a subsidiary during any one calendar year, in each case as the Committee may - 11 - deem appropriate, unless such adjustment would cause any award that would otherwise qualify as performance based compensation with respect to a "162(m) covered employee" (as defined in Section 3.9(a)(i)), to cease to so qualify. (b) Outstanding Restricted Stock and Performance Shares. Unless the Committee in its absolute discretion otherwise determines, any securities or other property (including dividends paid in cash) received by a grantee with respect to a share of restricted stock, the issue date with respect to which occurs prior to such event, but which has not vested as of the date of such event, as a result of any dividend, stock split, reverse stock split, recapitalization, merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of restricted stock vests, and shall be promptly deposited with the Company or other custodian designated pursuant to Section 2.7(c) hereof. The Committee may, in its absolute discretion, adjust any grant of shares of restricted stock, the issue date with respect to which has not occurred as of the date of the occurrence of any of the following events, or any grant of performance shares, to reflect any dividend, stock split, reverse stock split, recapitalization, merger, consolidation, combination, exchange of shares or similar corporate change as the Committee may deem appropriate to prevent the enlargement or dilution of rights of grantees. (c) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Increase or Decrease in Issued Shares Without Consideration. Subject to any required action by the stockholders of the Company, in the event of any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend (but only on the shares of Common Stock), or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company, the Committee shall proportionally adjust the number of shares of Common Stock subject to each outstanding option and stock appreciation right, and the exercise price-per-share of Common Stock of each such option and stock appreciation right and the number of any related dividend equivalent rights. (d) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Certain Mergers. Subject to any required action by the stockholders of the Company, in the event that the Company shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of shares of Common Stock receive securities of another corporation), each option, stock appreciation right and dividend equivalent right outstanding on the date of such merger or consolidation shall pertain to and apply to the securities which a holder of the number of shares of Common Stock subject to such option, stock appreciation right or dividend equivalent right would have received in such merger or consolidation. (e) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Certain Other Transactions. In the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company's assets, (iii) a merger or consolidation involving the Company in which the Company is not the surviving corporation or (iv) a merger or consolidation involving the Company in which the Company is the surviving corporation but the holders of shares of Common Stock receive securities of another corporation and/or other property, including cash, the Committee shall, in its absolute discretion, have the power to: (A) cancel, effective immediately prior to the occurrence of such event, each option and stock appreciation right (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable), and, in full consideration of such cancellation, pay to the grantee to whom such option or stock appreciation right was granted an amount in cash, for each share of Common Stock subject to such option or stock appreciation right, respectively, equal to the excess of (x) the value, as determined by the Committee in its absolute discretion, of the property (including cash) received by the holder of a share of Common Stock as a result of such event over (y) the exercise price of such option or stock appreciation right; or (B) provide for the exchange of each option and stock appreciation right (including any related dividend equivalent right) outstanding immediately - 12 - prior to such event (whether or not then exercisable) for an option on or stock appreciation right and dividend equivalent right with respect to, as appropriate, some or all of the property which a holder of the number of shares of Common Stock subject to such option or stock appreciation right would have received and, incident thereto, make an equitable adjustment as determined by the Committee in its absolute discretion in the exercise price of the option or stock appreciation right, or the number of shares or amount of property subject to the option, stock appreciation right or dividend equivalent right or, if appropriate, provide for a cash payment to the grantee to whom such option or stock appreciation right was granted in partial consideration for the exchange of the option or stock appreciation right. (f) Outstanding Options, Stock Appreciation Rights and Dividend Equivalent Rights -- Other Changes. In the event of any change in the capitalization of the Company or a corporate change other than those specifically referred to in Sections 3.7(c), (d) or (e) hereof, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to options, stock appreciation rights and dividend equivalent rights outstanding on the date on which such change occurs and in the per-share exercise price of each such option and stock appreciation right as the Committee may consider appropriate to prevent dilution or enlargement of rights. In addition, if and to the extent the Committee determines it is appropriate, the Committee may elect to cancel each option and stock appreciation right (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable), and, in full consideration of such cancellation, pay to the grantee to whom such option or stock appreciation right was granted an amount in cash, for each share of Common Stock subject to such option or stock appreciation right, respectively, equal to the excess of (i) the Fair Market Value of Common Stock on the date of such cancellation over (ii) the exercise price of such option or stock appreciation right. (g) No Other Rights. Except as expressly provided in the Plan, no grantee shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of the Company or any other corporation. Except as expressly provided in the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to an award or the exercise price of any option or stock appreciation right. 3.8 Change in Control (a) Change in Control Defined. For purposes of this Section 3.8, "Change in Control" shall mean the occurrence of any of the following: (i) any person or "group" (within the meaning of Section 13(d)(3) of the 1934 Act), other than the person acting as Chairman of the Board immediately following the Company's initial public offering ("Chairman") or entities which the Chairman directly or indirectly controls (as defined in Rule 12b-2 under the 1934 Act), acquiring "beneficial ownership" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of fifty percent (50%) or more of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company; (ii) the sale of all or substantially all of the Company's assets in one or more related transactions to a person other than such a sale to a subsidiary of the Company which does not involve a change in the equity holdings of the Company or to an entity which the Chairman directly or indirectly control; or (iii) any merger, consolidation, reorganization or similar event of the Company or any of its subsidiaries, as a result of which the holders of the voting stock of the Company immediately prior to such merger, consolidation, reorganization or similar - 13 - event do not directly or indirectly hold at least fifty-one percent (51%) of the aggregate voting power of the capital stock of the surviving entity. (b) Effect of a Change in Control. Upon the occurrence of a Change in Control: (i) notwithstanding any other provision of this Plan, any award then outstanding shall become fully vested and any award in the form of an option or stock appreciation right shall be immediately exercisable; (ii) to the extent permitted by law, the Committee may, in its sole discretion, amend any Grant Certificate in such manner as it deems appropriate; (iii) a grantee who incurs a termination of employment for any reason, other than a dismissal for cause, concurrent with or within one year following the Change in Control may exercise any outstanding option or stock appreciation right, but only to the extent that the grantee was entitled to exercise the award on his termination of employment date, until the earlier of (A) the original expiration date of the award and (B) the later of (x) the date provided for under the terms of Section 2.5 without reference to this Section 3.8(b)(iii) and (y) the first anniversary of the grantee's termination of employment. (c) Miscellaneous. Whenever deemed appropriate by the Committee, any action referred to in paragraph (b) (ii) of this Section 3.8 may be made conditional upon the consummation of the applicable Change in Control transaction. 3.9 Limitations Imposed by Section 162(m) (a) Qualified Performance-Based Compensation. To the extent the Committee determines it is desirable to grant an award to an individual it anticipates might be a "162(m) covered employee" (as defined below), with respect to which award the compensation realized by the grantee will or may not otherwise be deductible by operation of section 162(m) of the Code, the Committee may, as part of its effort to have such an award treated as "qualified performance-based compensation" within the meaning of Code section 162(m), make the vesting of the award subject to the attainment of one or more preestablished objective performance goals. (i) An individual is a "162(m) covered employee" if, as of the last day of the Company's taxable year for which the compensation related to an award would otherwise be deductible (without regard to section 162(m)), he or she is (A) the chief executive officer of the Company (or is acting in such capacity) or (B) one of the four highest compensated officers of the Company other than the chief executive officer. Whether an individual is described in either clause (A) or (B) above shall be determined in accordance with applicable regulations under section 162(m) of the Code. (ii) If the Committee has determined to grant an award to an individual it anticipates might be a 162(m) covered employee pursuant to this Section 3.9(a), then prior to the earlier to occur of (A) the first day after 25% of each period of service to which the performance goal relates has elapsed and (B) the ninety first (91st) day of such period and, in either case, while the performance outcome remains substantially uncertain, the Committee shall set one or more objective performance goals for each such 162(m) covered person for such period. Such goals shall be expressed in terms of (A) one or more corporate or divisional earnings-based measures (which may be based on net income, operating income, cash flow, residual income or any combination thereof) and/or (B) one or more corporate or divisional sales-based measures. Each such goal may be expressed on an absolute and/or relative basis, may employ comparisons with past performance of the Company (including one or more divisions) and/or the current or past performance of other companies, and in the case of earnings-based measures, may employ comparisons to capital, stockholders' equity and shares outstanding. The terms of the award shall state an objective formula or standard for computing the amount of compensation payable, and shall preclude discretion to increase the amount of compensation payable, if the goal is attained. - 14 - (iii) Except as otherwise provided herein, the measures used in performance goals set under the Plan shall be determined in accordance with generally accepted accounting principles ("GAAP") and in a manner consistent with the methods used in the Company's regular reports on Forms 10-K and 10-Q, without regard to any of the following unless otherwise determined by the Committee consistent with the requirements of section 162(m)(4)(C) and the regulations thereunder: (A) all items of gain, loss or expense for the period that are related to special, unusual or nonrecurring items, events or circumstances affecting the Company or the financial statements of the Company; (B) all items of gain, loss or expense for the period that are related to (x) the disposal of a business or discontinued operations or (y) the operations of any business acquired by the Company during the period; and (C) all items of gain, loss or expense for the period that are related to changes in accounting principles or to changes in applicable law or regulations. (b) Nonqualified Deferred Compensation. Notwithstanding any other provision hereunder, prior to a Change in Control, if and to the extent that the Committee determines the Company's federal tax deduction in respect of an award may be limited as a result of section 162(m) of the Code, the Committee may take the following actions: (i) With respect to options, stock appreciation rights or dividend equivalent rights, the Committee may delay the exercise or payment, as the case may be, in respect of such options, stock appreciation rights or dividend equivalent rights until a date that is within 30 days after the earlier to occur of (A) the date that compensation paid to the grantee no longer is subject to the deduction limitation under section 162(m) of the Code and (B) the occurrence of a Change in Control. In the event that a grantee exercises an option, stock appreciation right or would receive a payment in respect of a dividend equivalent right at a time when the grantee is a 162(m) covered employee, and the Committee determines to delay the exercise or payment, as the case may be, in respect of any such award, the Committee shall credit cash or, in the case of an amount payable in Common Stock, the Fair Market Value of the Common Stock, payable to the grantee to a book account. The grantee shall have no rights in respect of such book account and the amount credited thereto shall not be transferable by the grantee other than by will or laws of descent and distribution. The Committee may credit additional amounts to such book account as it may determine in its sole discretion. Any book account created hereunder shall represent only an unfunded, unsecured promise by the Company to pay the amount credited thereto to the grantee in the future. (ii) With respect to restricted stock, unrestricted stock or performance shares, the Committee may require the grantee to surrender to the Committee any certificates with respect to restricted stock and unrestricted stock and agreements with respect to performance shares, in order to cancel the awards of such restricted stock, unrestricted stock and performance shares (and any related dividend equivalent rights). In exchange for such cancellation, the Committee shall credit to a book account a cash amount equal to the Fair Market Value of the shares of Common Stock subject to such awards. The amount credited to the book account shall be paid to the grantee within 30 days after the earlier to occur of (A) the date that compensation paid to the grantee no longer is subject to the deduction limitation under section 162(m) of the Code and (B) the occurrence of a Change in Control. The grantee shall have no rights in respect of such book account and the amount credited thereto shall not be transferable by the grantee other than by will or laws of descent and distribution. The Committee may credit additional amounts to such book account as it may determine in its sole discretion. Any book account created hereunder shall represent only an unfunded, unsecured promise by the Company to pay the amount credited thereto to the grantee in the future. 3.10 Right of Discharge Reserved Nothing in the Plan or in any Grant Certificate shall confer upon any grantee the right to continue his employment or affect any right which the Company may have to terminate such employment. 3.11 Nature of Payments (a) Consideration for Services Performed. Any and all grants of awards and issuances of shares of Common Stock under the Plan shall be in consideration of services performed for the Company by the grantee. - 15 - (b) Not Taken into Account for Benefits. All such grants and issuances shall constitute a special incentive payment to the grantee and shall not be taken into account in computing the amount of salary or compensation of the grantee for the purpose of determining any benefits under any pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the Company or under any agreement between the Company and the grantee, unless such plan or agreement specifically otherwise provides. 3.12 Non-Uniform Determinations The Committee's determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or who are eligible to receive, awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Grant Certificates, as to (a) the persons to receive awards under the Plan, (b) the terms and provisions of awards under the Plan, and (c) the treatment of leaves of absence pursuant to Section 1.6(c). 3.13 Other Payments or Awards Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. 3.14 Headings Any section, subsection, paragraph or other subdivision headings contained herein are for the purpose of convenience only and are not intended to expand, limit or otherwise define the contents of such subdivisions. 3.15 Effective Date and Term of Plan (a) Adoption; Stockholder Approval. The Plan was adopted by the Board on _______, 2001. Although the Company intends to obtain approval of the Plan by the Company's stockholders within the time period required to allow grants of options hereunder to qualify as incentive stock options, awards under the Plan prior to such stockholder approval may, but need not, be made subject to such approval. (b) Termination of Plan. Unless sooner terminated by the Board or pursuant to Paragraph (a) above, the provisions of the Plan respecting the grant of incentive stock options shall terminate on the tenth anniversary of the adoption of the Plan by the Board, and no incentive stock option awards shall thereafter be made under the Plan. All such awards made under the Plan prior to its termination shall remain in effect until such awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Grant Certificates. 3.16 Restriction on Issuance of Stock Pursuant to Awards The Company shall not permit any shares of Common Stock to be issued pursuant to Awards granted under the Plan unless such shares of Common Stock are fully paid and non-assessable under applicable law. 3.17 Governing Law Except to the extent preempted by any applicable federal law, the Plan will be construed and administered in accordance with the laws of the State of [New York], without giving effect to principles of conflict of laws. - 16 - EX-10.34 21 a2050304zex-10_34.txt EXHIBIT 10.34 Exhibit 10.34 STOCK PURCHASE AGREEMENT by and among UNITED PROJECTS SHIPPING & FINANCIAL INC. as Seller and GENERAL MARITIME CORPORATION as Purchaser May 25, 2001 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is dated as of May 25, 2001, by and between General Maritime Ship Holdings Ltd, a Marshall Islands corporation (the "PURCHASER"), and United Projects Shipping & Financial Inc., a Liberian corporation (the "SELLER"). Purchaser and Seller are sometimes referred to herein collectively as the "PARTIES" and each individually as a "PARTY." RECITALS A. Seller owns all of the issued and outstanding shares of capital stock of United Overseas Tankers Ltd., a Liberian corporation (the "COMPANY"). B. Purchaser desires to acquire all of the issued and outstanding capital stock of the Company, and Seller desires to sell the same, on the terms and conditions hereinafter contained. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties, intending legally to be bound, agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the meanings set forth below: 1.01 "AFFILIATE" means, with respect to a specified Person, any other Person (i) which controls, is controlled by or is under common control with such specified Person. 1.02 "AGREEMENT" means this Agreement and all Exhibits and Schedules annexed hereto, as the same may be amended, supplemented or modified from time to time. 1.03 "BUSINESS" means the business of the Company as presently conducted, including, without limitation, technical management of vessels, including the purchasing, crewing, engineering, accounting, maintenance, and repair of vessels. 1.04 "CUSTOMERS" has the meaning assigned to it in Section 4.10. 1.05 "CLOSING" has the meaning assigned to it in Section 3.02. 1.06 "CLOSING DATE" means the date on which the Recapitalization Closing Time (as defined in the Plan of Recapitalization) occurs. 1.07 "CLOSING BALANCE SHEET" means the balance sheet of Company, prepared on the basis described in the Financial Statements, as of the Closing Date. 1.08 "COMPANY" has the meaning assigned to it in Recital A. 1.09 "COMPANY SHARES" has the meaning assigned to it in Section 4.01(b). 1.10 "CONTRACTS" has the meaning assigned to it in Section 4.11(a). 1.11 "DISCLOSURE SCHEDULE" means the disclosure schedule accompanying this Agreement which Seller has prepared. 1.12 "DISPUTE NOTICE" has the meaning assigned to it in Section 2.02(e). 1.13 "ENVIRONMENTAL CLAIM" means any claim, allegation, action, cause of action, investigation, removal, remedial activity, or notice by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company. 1.14 "ENVIRONMENTAL LAW" means any Law of any Governmental Body of any country concerning the environment or human health, or activities that might threaten or result in damage to the environment or human health, or any Law that is concerned in whole or in part with the environment or human health and with protecting or improving the quality of the environment or human health and includes, but is not limited to, (a) the following U.S. Laws: the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990; (b) any similar Laws of any other country; and (c) and all rules, regulations, guidance, and directives promulgated under such Laws, each of the foregoing as amended or supplemented from time to time; and any and all treaties, conventions and environmental public and employee health and safety statutes. 1.15 "ESTIMATED PURCHASE PRICE" means the sum of U.S.$6,000,000 plus Purchaser's good faith estimate of the amount of all of the Company's accounts receivable at the Closing Date and cash minus Purchaser's good faith estimate of the amount of all of the Company's accounts payable and other indebtedness at the Closing Date, which estimated amounts shall be reasonably acceptable to Seller. 1.16 "FINANCIAL STATEMENTS" means (i) the balance sheets of the Company as of December 31, 1997 and December 31, 1998, and (ii) the statements of income of Seller for the two years ended December 31, 1998, prepared, in each case, in accordance with GAAP and on the basis described therein and attached hereto as SCHEDULE 4.05(A). 1.17 "GAAP" means generally accepted accounting principles of the United States. 1.18 "GOVERNMENTAL BODY" means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, court, tribunal, official arbitrator or arbitral body, in each case whether domestic or foreign. 1.19 "HOLDBACK AMOUNT" has the meaning assigned to it in Section 2.02(a). 1.20 "HOLDBACK PERCENTAGE" means 10%. -2- 1.21 "INDEMNIFIED PARTY" has the meaning assigned to it in Section 7.05. 1.22 "INDEMNIFYING PARTY" has the meaning assigned to it in Section 7.05. 1.23 "INTELLECTUAL PROPERTY" means (a) patents and copyrights and applications for and licenses and permits concerning any of them; (b) databases, analytical tools, marketing reports, business plans, historical information and data, past reports, and information resources; and (c) trade secrets, inventions, know-how, customer lists, manuals, methodologies, all source and object codes, computer software and all other intellectual property rights and documents required for or incident to the Business, including, without limitation, all "proprietary information," as defined in Section 8.02(a), and all books and records incident thereto. 1.24 "INTERIM BALANCE SHEET" means the balance sheet of Company, prepared in accordance with GAAP and on the basis described in the Financial Statements, as of March 31, 2001. 1.25 "INTERIM FINANCIAL STATEMENTS" means (a) the Interim Balance Sheet and (b) the statement of income of the Company for the period commencing on January 1, 2001 and ending on March 31, 2001 and prepared, in each case, in accordance with GAAP and on the basis described in the Financial Statements and set forth in Section 4.05(b) of the Disclosure Schedule. 1.26 "LAWS" means all applicable provisions of all constitutions, treaties, statutes, laws (including, but not limited to, the common law), rules, regulations, ordinances, codes or orders of any Governmental Body and of all orders, decisions, injunctions, judgments, awards and decrees or consents of or agreements with any Governmental Body. 1.27 "LICENSES" has the meaning assigned to it in Section 4.22. 1.28 "LIENS" means, with respect to any asset of any Person, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. 1.29 "LOSSES" has the meaning assigned to it in Section 7.02. 1.30 "MATERIAL ADVERSE EFFECT" has the meaning assigned to it in Section 4.07. 1.31 "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, and any other chemicals, pollutants or substances regulated under any Environmental Law. 1.32 "PARTIES" has the meaning assigned to it in the preamble. 1.33 "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, governmental body or authority or any other entity. 1.34 "PURCHASE PRICE" has the meaning assigned to it in Section 2.02(b). -3- 1.35 "PURCHASER" has the meaning assigned to it in the preamble. 1.36 "PURCHASER INDEMNIFIED PARTIES" has the meaning assigned to it in Section 7.02. 1.37 "PURCHASER'S POST-CLOSING STATEMENT" has the meaning assigned to it in Section 2.02(b). 1.38 "REAL PROPERTY LEASE" has the meaning assigned to it in Section 4.17(a). 1.39 "RECORDS" has the meaning assigned to it in Section 6.01. 1.40 "RETURNS" has the meaning assigned to it in Section 4.23(a). 1.41 "SELLER" has the meaning assigned to it in the preamble. 1.42 "SELLER INDEMNIFIED PARTY" has the meaning assigned to it in Section 7.03. 1.43 "TAX" or "TAXES" means taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of any kind in the nature of (or similar to) taxes, payable to any taxing authority of any Governmental Body, including (a) income, franchise, profits, gross receipts, AD VALOREM, net worth, value added, sales, use, service, real or personal property, special assessments, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and (b) interest, penalties, additional taxes and additions to tax imposed with respect thereto. 2. PURCHASE AND SALE OF COMPANY SHARES. 2.01 PURCHASE AND SALE. Subject to and upon the terms and conditions hereinafter set forth, at the Closing, and in reliance upon the representations and warranties contained in this Agreement or made pursuant hereto, Seller hereby agrees to sell, assign, transfer and deliver to Purchaser, and Purchaser hereby agrees to purchase from Seller, all of the Company Shares owned by Seller free and clear of all Liens. 2.02 CALCULATION AND ISSUANCE OF CONSIDERATION. (a) ESTIMATED PURCHASE PRICE. In consideration of the aforesaid sale, assignment, transfer and delivery of all Company Shares outstanding at the Closing Date, the Purchaser shall, subject to the terms and conditions hereof, pay to Seller at the Closing the Estimated Purchase Price less an amount equal to the Holdback Percentage multiplied by the Estimated Purchase Price (the "HOLDBACK AMOUNT"). To the extent that the Holdback Amount, as the same may be adjusted under this Section 2.02(a), is not subject to an indemnification claim against Seller under Section 7.02 twelve months after the Closing, Purchaser shall pay the Holdback Amount to Seller. Purchaser shall pay to Seller such portion of the Holdback Amount that is subject to such an indemnification claim to Seller to the extent Purchaser and Seller or a court of competent jurisdiction finally resolves such claim in favor of Seller without the possibility of appeal. -4- (b) PURCHASE PRICE. The final purchase Price for the Company Shares hereunder (the "Purchase Price") shall be equal to U.S.$6,000,000 plus the amount of all of the Company's accounts receivable and cash minus the amount of all of the Company's accounts payable and other indebtedness at the Closing Date as set forth on the Closing Balance Sheet. For purposes hereof, the terms "accounts receivable," "accounts payable," "indebtedness," and "cash" shall have the meanings ascribed to such terms under GAAP. (c) PREPARATION OF POST-CLOSING STATEMENT. The Purchaser shall, as soon as reasonably practicable, but in no event later than 45 days after the Closing Date, deliver to Seller a statement setting forth the Purchaser's calculation of (i) the Closing Balance Sheet, (ii) the Purchase Price (calculated based on the Closing Balance Sheet and the Closing Income Statement pursuant to the formula set forth in Section 2.02(b), and (iii) the amount of money to be transferred from Purchaser to Seller or vice versa pursuant to Section 2.02(d), if any (the "PURCHASER'S POST-CLOSING Statement"). The Closing Balance Sheet and Closing Income Statement shall each be prepared on the basis described in the Financial Statements consistent with the accounting practices of Seller reflected on the Interim Balance Sheet. Seller shall cooperate with the Purchaser in the preparation of the Closing Balance Sheet and Closing Income Statement, which shall include providing information and other materials that are reasonably requested by the Purchaser in connection therewith. Purchaser, upon reasonable advance written notice by Seller, shall provide Seller with access to the books, records and work papers of Purchaser relating to Purchaser's Post-Closing Statement. (d) RECONCILIATION. If the difference of the Purchase Price minus the Estimated Purchase Price is positive, Purchaser shall pay such difference minus an amount equal to the Holdback Percentage multiplied by such difference to Seller within five days after the date such amount is finalized pursuant to this Section 2.02, and the Holdback Amount shall be increased by the product of the Holdback Percentage multiplied by such difference. If such difference is negative, Seller shall refund such difference minus an amount equal to the Holdback Percentage multiplied by such difference to Purchaser within five days of the date such amount is finalized pursuant to this Section 2.02, and the Holdback Amount shall be decreased by the product of the Holdback Percentage multiplied by such difference. (e) REVIEW BY SELLER; DISPUTES. If Seller disagree with any matter set forth in the Purchaser's Post-Closing Statement in any respect, Seller shall provide the Purchaser with notice of such disagreement setting forth in reasonable detail the nature and basis of such disagreement, and Seller's proposed adjustment(s) (a "DISPUTE NOTICE") within 20 days after the Seller's receipt thereof. If the Purchaser does not receive a Dispute Notice within such 20-day period, Seller shall be deemed to have agreed with the matters set forth in the Purchaser's Post-Closing Statement, including, without limitation, the determination of the Reconciliation Number set forth therein. If Seller timely provides a Dispute Notice to the Purchaser, the representatives of Seller and Purchaser shall meet promptly and attempt in good faith to resolve any differences. If Purchaser and Seller cannot mutually resolve such disagreement within 10 days after the date of Seller's Dispute Notice, such dispute promptly shall be submitted for resolution to a recognized -5- and reputable certified public accounting firm that is mutually acceptable to the Purchaser and Seller. If Seller and the Purchaser cannot agree upon a mutually acceptable public accounting firm, the New York City office of the American Arbitration Association shall choose a recognized and reputable U.S. certified public accounting firm having an office in the Hellenic Republic. Such accounting firm promptly shall resolve the matters that are in disagreement among the Parties with respect to the Purchaser's Post-Closing Statement as set forth in the Dispute Notice in accordance with the terms of this Agreement, and promptly shall deliver its determination in writing to Purchaser and Seller. The fees and expenses of such accounting firm shall be borne by the Purchaser and Seller pro rata based on the difference between the adjustment that is awarded by such accounting firm from the adjustment set forth in the Purchaser's Post-Closing Statement as to the portion to be borne by the Purchaser and the difference between the adjustment that is awarded by such accounting firm from the adjustment set forth in the Dispute Notice as to the portion to be borne by Seller. The determination of such accounting firm shall be final and binding upon Purchaser and Seller. 3. CLOSING. 3.01 DATE AND LOCATION. The consummation of the purchase and sale of the Company Shares (the "CLOSING") shall be held on the Closing Date, effective at 5:00 p.m. Eastern Standard Time on such Closing Date, at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022. 3.02 CLOSING DELIVERIES. On the Closing Date (a) the Purchaser pay to Seller the Estimated Purchase Price less the Holdback Amount and (b) Seller shall deliver to the Purchaser (i) the certificates representing all the Company Shares accompanied by stock powers duly endorsed in blank or duly executed instruments of transfer, (ii) an estimated Closing Balance Sheet, and (iii) all other documents, agreements and instruments then required to be delivered by Seller pursuant to Section 2.01 or 3.03. 3.03 FURTHER ASSURANCES. Seller agrees to execute and deliver, and to cause the Company to execute and deliver, such additional documents and instruments, and to perform such additional acts, as Purchaser may reasonably request to effectuate or carry out and perform all the terms, provisions and conditions of this Agreement and the transactions contemplated hereby and to effectuate the intent and purposes hereof. 3.04 METHOD OF PAYMENT. Payments of any amounts of the Estimated Purchase Price, the Purchase Price, or any adjustments thereof shall be made by wire transfer to the account of the payee in accordance with wire transfer instructions provided by the payee to the payor in writing not later than two business days prior to the date such payment is to be made. 4. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and warrants to the Purchaser as follows: 4.01 ORGANIZATION AND QUALIFICATION; OWNERSHIP. (a) The Company is a corporation duly organized, validly existing and in good standing under the Laws of the Republic of Liberia and has all requisite power and -6- authority to conduct the Business and to own and lease its property and assets. The Company is qualified to do business as a foreign corporation and is in good standing in the Hellenic Republic and in other each jurisdiction in which the ownership of property or the conduct of the Business requires such qualification, except for such jurisdictions in which the failure to be so qualified is not reasonable likely to have, individually or in the aggregate, a Material Adverse Effect. Section 4.01(a) of the Disclosure Schedule sets forth a true, correct and complete list of each jurisdiction in which the Company is duly qualified and in good standing to conduct business. The Company has established (under Greek Law 89/1967, as amended) an office in the Hellenic Republic which is qualified to transact the business specified in the relevant license (no. 3122.1/3427/23753/2.2.2000) (the "LAW 89 LICENSE") which is in full force and effect, and the terms of which have been fully complied with. The Company has delivered to Purchaser or its counsel complete and correct copies of the charter and by-laws of the Company, in each case as amended to the date of this Agreement. (b) The aggregate number of shares of authorized stock in the Company is five hundred (500) shares of registered and/or bearer shares of stock with no par value, all of which are issued and outstanding (the "COMPANY SHARES"). Seller owns, beneficially and of record, and has good, valid and marketable title to and the right to transfer to the Purchaser, all of the Company Shares, free and clear of any and all Encumbrances. At the Closing, Seller will convey ownership of the Company Shares, and after giving effect to the transactions contemplated herein, Purchaser will own, and have good, valid, and marketable title to all of the issued and outstanding shares of capital stock of the Company, free and clear of any and all Liens. No Person other than Purchaser has any written or oral agreement, arrangement or understanding or option to or any right or privilege (whether by law, preemption, or contract) that is an agreement, arrangement, understanding, or option for the purchase or acquisition from Seller of any shares of capital stock or other securities of the Company. (c) There are no outstanding or authorized options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities, contracts, arrangements, understanding or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any of its authorized but unissued shares of capital stock or any securities convertible into, exchangeable for or carrying a right or option to purchase shares of capital stock or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of capital stock. There are no outstanding stockholders' agreements, registration rights agreements, or rights of first refusal pertaining to the Company's capital stock. None of the issued and outstanding shares of capital stock of the Company has been issued in violation of any rights of any Person or in violation of the registration requirements of the laws of any country or political subdivision thereof. (d) The Company does not own of record or beneficially, and is not committed to purchase or otherwise acquire, any shares of capital stock or other comparable equity interest of any Person. -7- 4.02 AUTHORIZATION. Seller has all requisite legal power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Seller and (assuming due authorization, execution and delivery by the Purchaser) constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws of general applicability affecting the rights of creditors and by general equitable principles. 4.03 NO VIOLATIONS OR CONFLICTS. The execution, delivery and performance by Seller of this Agreement, and the consummation by Seller of the transactions contemplated hereby do not and will not (with the giving of notice or the passage of time or both) (a) violate any provision of the Company's governing documents, (b) result in a violation or breach of, or constitute a default or an event of default under, any indenture, mortgage, bond, contract, agreement, instrument or other obligation to which the Company or Seller or by which any of their respective assets are bound, (c) violate any Law, writ, judgment, injunction, court decree, license or permit to which the Company or Seller or any of their respective assets are subject, or (d) otherwise result in the creation of any Lien; except, as to clause (b) only, any violation, breach, default or event of default that will not have a Material Adverse Effect. 4.04 CONSENTS AND APPROVALS. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or any other Person is required to be made or obtained by the Company or the Seller in connection with the execution, delivery and performance of this Agreement. 4.05 FINANCIAL STATEMENTS. Seller has previously delivered to Purchaser the Financial Statements and the Interim Financial Statements, which Financial Statements are set forth in Section 4.05(a) of the Disclosure Schedule and which Interim Financial Statements are set forth in Section 4.05(b) of the Disclosure Schedule. The Financial Statements and the Interim Financial Statements have been prepared on the basis described in the Financial Statements and fairly present, in all material respects, the financial position and results of operations of the Company as of the dates and for the periods presented therein, applied on a consistent basis during the periods concerned except as otherwise noted therein. Seller has previously delivered to the Purchaser the Interim Balance Sheet, a copy of which is set forth in Section 4.05(c) of the Disclosure Schedule. The Interim Balance Sheet has been prepared on the basis described in the Financial Statements and fairly presents, in all material respects, the financial position of the Company as of the date thereof. 4.06 NO UNDISCLOSED LIABILITIES. Since December 31, 2000, the Company has incurred no debts, Taxes, liabilities, civil penalties, claims or obligations (whether absolute, accrued, contingent or otherwise), except such liabilities which were incurred in the ordinary course of business consistent with past practice. 4.07 ABSENCE OF CERTAIN CHANGES. Since December 31, 2000, the Company has not (a) suffered any change in its business, operations, condition (financial or otherwise) or prospects, except such changes which, in the aggregate, have not had and are not reasonably likely to have a material adverse effect on the Company's business, operations, condition (financial or otherwise), or prospects (a "MATERIAL ADVERSE EFFECT"), (b) incurred any long-term -8- indebtedness for borrowed money or guaranteed, assumed or endorsed the obligations of any other Person, (c) except in the ordinary course of business, sold, transferred or otherwise disposed of any assets which in the aggregate exceeded U.S.$20,000, or (d) materially increased the compensation or benefits payable to its employees or independent contractors. 4.08 RECEIVABLES AND PAYABLES. The Company has no receivables other than receivables from affiliates of Purchaser and all such receivables were incurred in the ordinary course of business. There have been no material changes in the information on such schedule since such date. All of the accounts and notes receivable and trade notes and trade accounts owing to the Company constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business and are collectible in full. All accounts payable and notes payable by the Company arose in bona fide transactions in the ordinary course of business. 4.09 CONDUCT OF BUSINESS. Since December 27, 1999, the Company has conducted its operations and affairs only according to its ordinary and usual course of business, consistent in all material respects with past practice. No part of the Company's business is operated by any Person other than the Company. 4.10 CUSTOMERS; CUSTOMER RELATIONS. Section 4.10 of the Disclosure Schedule contains a true, complete and correct listing of all Persons for whom the Company has performed services since December 27, 1999 (the "CUSTOMERS"), together with a description in reasonable detail of the material terms of all their respective oral contracts with the Company, and a true, complete and correct listing of all their respective written contracts with the Company (complete copies of which have been provided to the Purchaser). The Company has not granted, or agreed to grant, any rebates, concessions, discounts or allowances with respect to any such contracts. None of the amounts payable to the Company under such contracts is subject to any counterclaim, set-off or other defense. Seller has no reasonable basis to believe that as of the Closing Date the relationships between the Company and the Customers are not amicable. The Company has not received any written notice or other written or (to the knowledge of Seller) oral statement from any of the Customers which could reasonably lead the Company or Seller to believe that any of the Customers intends to materially and substantially reduce or terminate its relationship with the Company, or engaged in any material renegotiation of the terms of any contract between the Company and any of the Customers. No client investigation or examination of any account receivable or performance of the Company is currently being conducted by any Person who at any time has been a client of the Company and, to the knowledge of Seller, no such investigation or examination has been threatened. The Company has not pre-billed any fees for which it has not yet performed the billed work. 4.11 CONTRACTS AND COMMITMENTS. (a) Section 4.11(a) of the Disclosure Schedule sets forth a true, complete and correct list and description of all agreements, to which, as of the Closing Date, the Company is a party or by which the Company is bound and which are material to the Business (being collectively referred to as the "CONTRACTS"). The Contracts are in full force and effect and are, to the knowledge of Seller, valid and enforceable in accordance with their respective terms against the parties thereto. The Company is not in default or -9- breach of any of the Contracts and, to the knowledge of Seller, no other party to any of the Contracts is in default or breach thereof. Seller has delivered to the Purchaser a true, complete and correct copy of each Contract. The Company has not assigned, delegated or otherwise transferred any of its rights or obligations with respect to any Contract. (b) There are no Contracts restricting the ability of the Company or any other Person to engage in any business in any place or to solicit clients or solicit Persons for employment or as independent contractors. 4.12 LITIGATION. There is no civil, criminal or administrative action, suit, claim, hearing, investigation or proceeding (including any Environmental Claim) pending, or to the knowledge of Seller, threatened, against the Company or its assets in any court, before any arbitral tribunal, or by or before any Governmental Body. 4.13 ENVIRONMENTAL MATTERS (a) The operations and properties of the Company are in compliance with applicable Environmental Laws (as hereinafter defined), which compliance includes the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof. (b) There are no Environmental Claims pending or, to Seller's knowledge, threatened in writing against the Company or any person or entity whose liability for any Environmental Claim that the Company has retained or assumed. (c) There are no past or present actions, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that are reasonably likely to form the basis of any Environmental Claim against the Company or any Person whose liability for any Environmental Claim that the Company has retained or assumed. 4.14 INTELLECTUAL PROPERTY. There is no Intellectual Property which is material to the Business. 4.15 SOFTWARE. All software and software products owned or licensed by the Company are commercially available, off-the-shelf software products. 4.16 COMPLIANCE WITH LAWS. The Company is in compliance with, and the Business has been operated in compliance with, its organizational documents and, in all material respects, with all Laws, including, without limitation, all Environmental Laws. 4.17 PROPERTIES. (a) REAL PROPERTY. The Company owns no real property. Section 4.17(a) of the Disclosure Schedule sets forth a true, complete and correct list of all real property and interest in real property leased by the Company (individually, a "REAL PROPERTY LEASE"). The Company has good and marketable title to the leasehold estates in all Real Property -10- Leases in each case free and clear of all Liens of any nature whatsoever. None of the Real Property Leases is subject to any lease, sublease, license or other agreement granting any other Person any right to the use, occupancy or enjoyment of the Real Property Leases or any part thereof. Each of the Real Property Leases is valid and enforceable in accordance with its terms, and there is no default under any Real Property Lease either by the Company or, to the knowledge of Seller, any other party thereto, and no event has occurred that (with the lapse of time or the giving of notice or both) would constitute a default thereunder, except as described in Section 4.17(a) of the Disclosure Schedule. Each of the Real Property Leases, upon the consummation of the transactions contemplated hereby, will continue to entitle the Company to the use, occupancy and possession of the real property specified in such Real Property Lease. Seller has delivered or otherwise made available to the Purchaser true, correct and complete copies of the Real Property Leases, together with all amendments, modifications, supplements or side letters thereto. (b) TANGIBLE PERSONAL PROPERTY. There are no leases of personal property used by the Company in the conduct of the Business or by which the Company or any of its assets is bound. (c) CONDITION AND SUFFICIENCY OF ASSETS. The properties and assets, including the equipment, supplies and other consumables, owned, leased or used by the Company in the conduct or operation of its businesses are in good operating condition and repair, are suitable for the purposes for which they are used, are adequate for the conduct of the business of the Company in substantially the manner currently conducted and are directly related to the Business. The Company is the sole owner of all properties and assets, utilized in the conduct or operation of the Business except for properties and assets leased or licensed to the Company pursuant to Contracts listed in Section 4.11(a) of the Disclosure Schedule. 4.18 SOCIAL SECURITY AND EMPLOYEE BENEFIT PLANS. The Company has no benefit plans (pension, medical, etc.) with respect to the Company's employees or any other Person other than as required by Law. All contributions, premiums, fees etc. due by the Company either for its own account or for the account of any other Person (after withholding or in any similar way) in respect of such benefit plans have been paid in full. All relevant filings, reports etc. have been duly submitted to the competent organizations or entities. There are no pending claims of any organization or other entity with respect to the Company or its assets with reference to the above obligations, nor any default in the Company's performance or payment of the above described obligations. 4.19 INSURANCE. Section 4.19 of the Disclosure Schedule sets forth a true, complete and correct list, and a summary description of the coverage provided thereby, of all liability insurance policies maintained by the Company or any other Person with respect to the Company or the its assets as of the date of this Agreement. All of such policies are in full force and effect. As of the date of this Agreement, all premiums due on such insurance policies on or prior to the date hereof have been paid. There are no pending claims with respect to the Company or its assets under any such insurance policies and there are no claims as to which the insurers have -11- notified any the Company of their intention to deny liability. There is no existing default under any such insurance policies. 4.20 RECORDS. The books of account and minute books of the Company are complete and correct in all material respects and there have been no transactions involving the business of the Company which were required to have been set forth therein and which have not been accurately so set forth to the knowledge of the Seller. 4.21 Employees and Independent Contractors (a) Section 4.21 of the Disclosure Schedule sets forth a true, complete and correct list of all employees of the Company as of the date hereof and, with respect to each such employee, the total compensation (including, without limitation, salary, bonuses and incentive compensation) received by such employee in the immediately preceding fiscal year of the Company, such employee's current compensation, such employee's current title and the number of years of continuous service of such employee and the period of service with the Company. (b) The Company is in compliance with all applicable Laws, agreements and contracts relating to employment practices, terms and conditions of employment, and the employment of former, current, and prospective employees, independent contractors and leased employees of the Company including all such Laws, agreements and contracts relating to wages, hours, collective bargaining, employment discrimination, immigration, disability, civil rights, fair labor standards, occupational safety and health, workers' compensation, pay equity, wrongful discharge and violation of the potential rights of such former, current, and prospective employees, independent contractors and leased employees, and has timely prepared and filed all appropriate forms required by any relevant Governmental Body. The Company is not engaged in any unfair labor practice. (c) The Company is party to no collective bargaining agreement with respect to the Business except as may be required by Law. (d) No strike, slowdown or work stoppage has occurred or, to the Seller's knowledge, been threatened with respect to the employees of the Company, nor has any such strike, slowdown or work stoppage occurred or, to the knowledge of Seller, been threatened since December 27, 1999. (e) There is no representation claim or petition pending before any labor agency of any Governmental Body of which the Company has been notified in writing or (to the knowledge of Seller) orally and, to the knowledge of Seller, no question concerning representation has been raised or threatened respecting the employees of the Company. (f) No written or (to the knowledge of Seller) oral notice has been received by the Company of any complaint filed against the Company claiming that the Company has violated any applicable employment standards, human rights or other labor legislation or any complaints or proceedings of any kind involving the Company or, to the knowledge of Seller, against any of the employees of the Company or threatened to be filed against the Company before any labor agency of any Governmental Body. No notice has been -12- received by the Company of the intent of any federal, state, local or foreign agency responsible for the enforcement of labor or employment laws to conduct an investigation of the Company, and no such investigation is in progress. (g) There are no outstanding orders or charges against the Company under any occupational health or safety legislation and, to the knowledge of Seller, none have been threatened in writing or (to Seller's knowledge) orally. There are no material levies, assessments and penalties made against the Company pursuant to all applicable workers compensation legislation. There have been no material levies, assessments or penalties against the Company pursuant to any applicable workers compensation legislation since the date of the Interim Balance Sheet. (h) Neither the Company nor Seller has made any statements or representations or distributed any written material to any employees of the Company regarding continued employment subsequent to the Closing Date. 4.22 LICENSES AND PERMITS. Section 4.22 of the Disclosure Schedule sets forth a true, complete and correct list of all approvals, permits, certificates, qualifications, authorizations, licenses, franchises, consents, orders and registrations of all Governmental Authorities or any other Person (collectively, "LICENSES") which are currently in effect with respect to the Company and its employees, and no other Licenses are necessary for the Company to conduct the Business. There are no proceedings pending, or to the knowledge of Seller, threatened, which could reasonably be expected to result in the revocation, cancellation, suspension or modification of any such License. 4.23 TAXES. (a) The Company has timely filed with the appropriate taxing authorities all returns and reports in respect of Taxes ("RETURNS") required to be filed by it (taking into account any extension of time to file granted to or on the account of the Company). The information on such Returns is complete and accurate in all material respects. The Company has paid on a timely basis all Taxes (whether or not shown on any Return) due and payable. There are no liens for Taxes (other than for current Taxes not yet due and payable) upon any assets of the Company. (b) No unpaid (or unreserved on the basis described in the Financial Statements applied on a consistent basis) deficiencies for Taxes have been claimed, proposed or assessed by any taxing or other Governmental Body with respect to the Company for any taxable period that includes or ends prior to the Closing Date and there are no pending or threatened audits, investigations or claims for or relating to any liability in respect of Taxes of the Company. The Company has not requested any extension of time within which to file any currently unfiled returns in respect of any Taxes and no extension of a statute of limitations relating to any Taxes is in effect with respect to the Company. To the knowledge of Seller, no claim has ever been made by a taxing authority in a jurisdiction where the Company does not currently file Tax Returns that the Company is or may be subject to taxation by that jurisdiction. -13- (c) The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party. 4.24 PREPAID EXPENSES. All prepaid expenses of the Company have been incurred in the ordinary course of business, and the Company will receive the full value of such prepaid expenses as reflected on the books and records of the Company in appropriate goods or services from each recipient of such prepaid expenses. 4.25 BROKERS AND FINDERS. No broker or finder has acted for Seller in connection with this Agreement or the transactions contemplated hereunder and no broker or finder retained by Seller is entitled to any brokerage or finder's fee with respect to this Agreement or such transactions. 5. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser represents and warrants to Seller as follows: 5.01 ORGANIZATION AND QUALIFICATION. The Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the Marshall Islands and has all requisite power and authority to conduct its business as presently conducted and to own and lease its property and assets. 5.02 AUTHORIZATION. The Purchaser has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by each the Purchaser and (assuming due authorization, execution and delivery by Seller) constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws of general applicability affecting the rights of creditors and by general equitable principles. 5.03 NO VIOLATIONS OR CONFLICTS. The execution, delivery and performance by the Purchaser of this Agreement, and the consummation by the Purchaser of the transactions contemplated hereby, does not and will not (with the giving of notice or the passage of time or both) (i) violate any provision of its governing documents, (ii) result in a violation or breach of, or constitute a default or an event of default under, any indenture, mortgage, bond, contract, license, agreement, permit, instrument or other obligation to which it is a party or by which any of its assets is bound, or (iii) violate any Law, writ, judgment, injunction or court decree to which the Purchaser is subject. 5.04 CONSENTS AND APPROVALS. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or any other Person is required to be made or obtained by the Purchaser in connection with its execution, delivery and performance of this Agreement and the Assumption Agreement. 5.05 BROKERS AND FINDERS. No broker or finder has acted for the Purchaser in connection with this Agreement or the transactions contemplated hereunder and no broker or -14- finder retained by the Purchaser is entitled to any brokerage or finder's fee with respect to this Agreement or such transactions. 6. COVENANTS. 6.01 CONDUCT OF BUSINESS. From the date hereof until the Closing, Seller will ensure that the Company does not do any of the following without the prior written consent of Purchaser: (a) amend or otherwise modify its constituting documents or by-laws (or similar organizational documents); (b) issue or sell or authorize for issuance or sale, or grant any options or make other agreements, arrangements, or understandings for the purchase or acquisition or the option for the purchase or acquisition of, any Company Shares or any other of its securities, or alter any term of any of its outstanding securities; (c) mortgage, pledge or grant any security interest in any of its assets; (d) declare, set aside, make or pay any dividend or other distribution to Seller; (e) redeem, purchase or otherwise acquire, directly or indirectly, any Company Shares; (f) apply for any modification of the Law 89 License or fail to abide by the requirements of the Law 89 License; (g) terminate or modify any Contract, except for terminations of Contracts upon their expiration during such period in accordance with their terms and terminations or modifications that have not had and would not reasonably be likely in the aggregate to have a Material Adverse Effect; (h) incur or assume any indebtedness for borrowed money or guarantee any obligation or the net worth of any Person in excess of the limits existing under Seller's existing credit facilities, except for endorsements of negotiable instruments for collection in the ordinary course of business; (i) discharge or satisfy any Lien other than those which are required to be discharged or satisfied during such period in accordance with their original terms; (j) pay any material obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, except for any current liabilities, and the current portion of any long term liabilities, shown on the Financial Statements (or not required as of the date thereof to be shown thereon in accordance with GAAP) or incurred since the date of the Balance Sheet in the ordinary course of business consistent with past practice; -15- (k) except as expressly permitted in this Section 6.01, sell, transfer, lease to others or otherwise dispose of any of its properties or assets; (l) cancel, waive or compromise any material debt or claim; (m) make any loan or advance to any Person other than advances to contractors and travel and other similar routine advances in the ordinary course of business consistent with past practice, or acquire any capital stock or other securities of any other corporation or any ownership interest in any other business enterprise; (n) make any capital expenditures or capital additions or betterments, except as contemplated in capital budgets in effect on the date of this Agreement and which have previously been delivered to Purchaser; (o) change its method of accounting or its accounting principles or practices, including any policies or practices with respect to the establishment of reserves for work-in-process, inventory and accounts receivable, utilized in the preparation of the Financial Statements; (p) institute or settle any litigation or any legal, administrative or arbitration action or proceeding before any court or Governmental Body relating to it or its property; (q) enter into any agreements, commitments or contracts for any real property leases; (r) enter into other agreements, commitments or contracts, except agreements, commitments or contracts made in the ordinary course of business consistent with past practice; or (s) enter into any commitment to do any of the foregoing. 6.02 NO SOLICITATION OF ALTERNATIVE TRANSACTION. Seller shall not, directly or indirectly, solicit or entertain offers from, negotiate with, provide any nonpublic information to, enter into any agreement with, or in any manner encourage, discuss, accept, or consider any proposal of, any third party relating to the acquisition of the Company, its assets or business, in whole or in part, whether through a tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or a significant amount of assets, sale of securities, liquidation, dissolution, or similar transactions involving the Company (collectively, "ACQUISITION PROPOSALS"). Seller shall promptly inform the Purchaser of any inquiry (including the terms thereof and the identity of the third party making such inquiry) which it may receive in respect of an Acquisition Proposal and furnish to the Purchaser a copy of any such written inquiry. 7. INDEMNIFICATION 7.01 SURVIVAL. The representations and warranties of Seller in Section 4.01 shall survive the Closing Date indefinitely. The representations and warranties of Seller in Section 4.23 shall survive the Closing Date until 30 days after the expiration of the applicable statute of -16- limitations. All other representations and warranties of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith shall survive the Closing Date for two years beginning on the Closing Date. The covenants of the Parties contained herein, or in any signed writing delivered pursuant hereto or in connection herewith, shall survive the Closing Date indefinitely. 7.02 INDEMNIFICATION BY SELLER. Seller shall indemnify Purchaser and its officers, directors, employees, agents and representatives, in their capacities as such, and the successors, heirs and personal representatives of any of them (collectively, "PURCHASER INDEMNIFIED PARTIES") against and hold them harmless from any and all damages, claims, losses, liabilities and expenses (including, without limitation, reasonable expenses of investigation and attorneys' fees and expenses) (each a "LOSS", and collectively, "LOSSES") incurred or suffered by any Purchaser Indemnified Party arising out of or relating to any breach by Seller of any representation, warranty, covenant or other agreement of Seller contained herein. The Purchaser may, at its option, offset against any payments due to Seller pursuant to this Agreement any amounts owed by Seller to the Purchaser pursuant to this Section 7.02. 7.03 INDEMNIFICATION BY THE PURCHASER. The Purchaser shall indemnify Seller and its successors and heirs (collectively, the "SELLER INDEMNIFIED PARTIES") against and hold them harmless from any and all Losses incurred or suffered by any Seller Indemnified Party arising out of or relating to any breach of any representation, warranty, covenant or other agreement of the Purchaser contained herein. 7.04 LIMITATIONS ON INDEMNIFICATION; TREATMENT OF HOLDBACK AMOUNT. No Party's indemnification obligations hereunder shall exceed the Purchase Price with respect to indemnification claims pursuant to Sections 7.02 or 7.03. In satisfaction of Seller's indemnification obligations, Purchaser shall first be entitled to reduce the Holdback Amount by the amount of the applicable Loss until the Holdback Amount equals zero. To the extent such reduction in the Holdback Amount does not fully offset the Loss, or if the Holdback Amount has already been paid to Seller, Seller shall pay to Purchaser the remainder of the Loss in cash, subject to the limitation in the first sentence of this Section 7.04. This Section 7.04 shall constitute Purchaser's sole remedy for the breach of any representation or warranty made by Seller in this Agreement. 7.05 INDEMNIFICATION; NOTICE AND SETTLEMENTS. For the purposes of this Section 7.05, the party seeking indemnification shall be known as the "INDEMNIFIED PARTY" and the party from whom indemnification is sought shall be known as the "INDEMNIFYING PARTY". As soon as reasonably practicable after the receipt by an Indemnified Party of notice of any Loss in respect of which an Indemnifying Party may be liable under Section 7.02, or 7.03, the Indemnified Party shall give notice thereof to the Indemnifying Party, setting forth in reasonable detail the facts and circumstances pertaining thereto; provided that the failure to give such notice shall not affect the Indemnified Party's rights to indemnification hereunder, unless and to the extent such failure shall prejudice in any significant respect the Indemnifying Party's ability to defend such claim, action or proceeding. The Indemnifying Party shall have the right to assume the defense of any such action or proceeding at its expense, provided that the selection of counsel is approved by the Indemnified Party (which approval will not be unreasonably withheld). If the Indemnifying Party shall elect not to assume the defense of any such action or proceeding, or fails to make -17- such an election within twenty (20) days after it receives such notice pursuant to the second sentence of this Section 7.05, the Indemnified Party may assume such defense at the expense of the Indemnifying Party. The Indemnified Party shall have the right to participate in (but not control) the defense of an action or proceeding defended by the Indemnifying Party hereunder and to retain its own counsel in connection with such action or proceeding, but the fees and expenses of such counsel shall be at the Indemnified Party's expense unless (i) the Indemnifying Party and the Indemnified Party have otherwise mutually agreed in writing to the retention of such counsel or (ii) the Indemnified Party concludes, based on advice of counsel, that representation of the Indemnifying Party and the Indemnified Party by the same counsel would create a conflict, provided that, unless otherwise agreed by the Indemnifying Party, if the Indemnifying Party is obligated to pay the fees and expenses of such counsel, the Indemnifying Party shall be obligated to pay only the fees and expenses associated with one attorney or law firm, as applicable, plus local counsel as required for the Indemnified Party. An Indemnifying Party shall not be liable under Section 7.02, or 7.03 for any settlement effected without its written consent, which consent will not be unreasonably withheld, of any claim, action or proceeding in respect of which indemnity may be sought hereunder. An Indemnifying Party shall not, without the consent of the Indemnified Party, settle any claim, action or proceeding in which indemnity may be sought hereunder unless such settlement involves only the payment of money damages by the Indemnifying Party and no admission of wrongdoing or other relief and includes a complete release of all Indemnified Parties. 7.06 TAX-RELATED ADJUSTMENTS TO INDEMNITY PAYMENTS. Indemnity payments made pursuant to Section 7.02 or 7.03 shall be increased by any Tax cost incurred as a result of the receipt of such payment and shall be decreased by any Tax benefit (for example, increased basis in an asset or a deduction available in a future year) received as a result of the Loss giving rise to such payment (taking into account the time value of money). 7.07 INSURANCE PAYMENTS. For purposes of this Section 7, the amount of any Loss of any Indemnified Party shall be reduced by the amount of any insurance proceeds received by such Indemnified Party as compensation for such Loss. Notwithstanding the foregoing, no Indemnified Party shall have any obligation to submit any claim to any of such Indemnified Party's insurance providers. 8. CERTAIN RESTRICTIVE COVENANTS. 8.01 CERTAIN ACKNOWLEDGEMENTS. The Purchaser and Seller acknowledge and agree that: (a) Seller has owned and controlled the Company and Seller has knowledge, information, contacts and client relationships which are essential to the Business; (b) The Purchaser and Seller have determined that it is essential to realizing the value of the Company and the Business acquired pursuant to this Agreement by purchase of the Company Shares that the Purchaser obtain the agreement of Seller set forth in this Section 8 including undertakings of Seller to protect certain proprietary information and not to engage in certain competitive activities or the solicitation of certain employees, contractors or customers, and as to certain other matters, all as hereinafter provided in -18- this Section 8 and therefore the Purchaser has required that the covenants and agreements hereinafter set forth be delivered in this Agreement and Seller has agreed to do so, as a condition to the Purchaser's willingness to enter into the transactions contemplated by this Agreement; and (c) Seller acknowledges and agrees that it is fair, reasonable and necessary for the protection of the value of the business, operations, prestige, reputation and goodwill of the Company and the Business by purchase of the Company Shares to be sold by Seller and purchased by Purchaser hereunder that Seller make the agreements and covenants contained in this Section 8. 8.02 PROPRIETARY INFORMATION, CONFIDENTIAL RECORDS, INTELLECTUAL PROPERTY RIGHTS. (a) PROPRIETARY INFORMATION. Seller acknowledges that in connection with its control of the Company to date, of necessity he or she has regularly developed and had access to, and use of, proprietary information and confidential records (as each such term is defined below). Seller covenants that he, she or it shall not at any time hereafter, directly or indirectly, use for his, hers or its own purpose or for the benefit of any Person other than the Purchaser at the Purchaser's request, or disclose, any proprietary information to any Person, unless such disclosure has been authorized in writing by the Purchaser. For purposes of this Agreement, the term "PROPRIETARY INFORMATION" shall include, but is not limited to: (i) the name and address of any client, customer, vendor or Affiliate of the Company and any information concerning any transactions or relations between any such client, customer or vendor of the Company with the Company or any of its shareholders, directors, officers, principals or agents; (ii) any information concerning any product, technology or procedure employed by the Company but not generally known to its clients, customers, vendors or competitors, or under development by or being tested by the Company but not at the time offered generally to customers or vendors; (iii) any information relating to computer software or systems used by the Company or the Company's pricing or marketing methods, sales margins, cost of goods, cost of material, capital structure, operating results, borrowing arrangements or business plans; (iv) any information which is generally regarded as confidential or proprietary in any line of business engaged in by the Company; (v) any business plans, budgets, advertising or marketing plans; (vi) any information contained in any written or oral policies and procedures or employee manuals of the Company; (vii) any information belonging to customers, vendors or Affiliates of the Company or any other Person which the Company has agreed to hold in confidence; (viii) any inventions, innovations or improvements of the Company; and (ix) all written, graphic and other material relating to any of the foregoing. Information that is not novel or copyrighted or patented may nonetheless be proprietary information. The term "proprietary information" shall not include information generally available to and known by the public but shall include information which becomes public as a result of a breach of an obligation of confidentiality by Seller or any Seller's Affiliate. (b) CONFIDENTIALITY AND SURRENDER OF RECORDS. Seller shall not at any time directly or indirectly publish, make known or in any fashion disclose any confidential records to, or permit any inspection or copying of confidential records by, any Person. Seller shall -19- not retain any confidential records of the Company and Seller shall promptly deliver to the Purchaser any of the same upon the Closing. For purposes hereof, "confidential records" means all correspondence, memoranda, files, manuals, books, lists, financial, operating or marketing records, magnetic tape, or electronic or other media or equipment of any kind relating to the Company or the Business which now or hereafter may be in Seller's possession or under any of their control or accessible to any of them which contain any proprietary information. All confidential records shall be and remain the sole property of the Company from and after the Closing. (c) INTELLECTUAL PROPERTY. All Intellectual Property relating to the Company or the Business or any of its methods of operations (including policies, procedures, products, improvements, software, ideas and discoveries) conceived or made by Seller, either alone or jointly with others, shall upon the Closing belong to the Company. Seller will promptly perform all actions reasonably requested by the Purchaser to establish and confirm such ownership by the Company, including cooperating with and assisting the Purchaser and the Company in obtaining patents, copyrights, servicemarks and trademarks for the Company. (d) CERTAIN PERMITTED DISCLOSURES AND USES. Section 8.02(a) and (b) shall not prevent (i) any disclosure required by law or order of a Governmental Body provided that if Seller is subject to any such requirement it shall, prior to any such disclosure, give the Purchaser prompt notice of any such requirement and shall cooperate with the Purchaser in obtaining a protective order or other means of protecting the confidentiality of the Purchaser's proprietary information and confidential records or (ii) to the extent required, to enforce any right, or defend any claim, under this Agreement. 8.03 NON-SOLICITATION, ETC. For a period of five years after the Closing, Seller shall not, directly or indirectly, for itself or for any Person (other than the Purchaser) as to which it is an employee, officer, director, investor, agent or contractor, as applicable, directly or indirectly: (a) contact, solicit or do business with any Customer relating to the provision of any aspect of the services included in the Business (whether or not contact is initiated by the Customer or an Affiliate thereof); (b) employ or engage any Person who is then or at any time during the period beginning on December 27, 1999 and ending on the Closing Date was in the employ of Seller or (ii) attempt to do any of the foregoing or assist any other Person to do or attempt to do any of the foregoing; (c) persuade or seek to persuade any Customer or any purchaser of services from the Company to cease to do business or to reduce the amount of business which it has customarily done or contemplates doing with the Company, whether or not the relationship between Seller or the Company and such customer was originally established in whole or in part through Seller's efforts; (d) take any action which is intended, or would reasonably be expected, to disparage the Company or its Affiliates or any of their respective employees, reputations -20- or services or the Business or which would reasonably be expected to lead to unwanted or unfavorable publicity to any of them; or (e) attempt to do any of the foregoing or assist any other Person to do or attempt to do any of the foregoing. 8.04 SELLER STOCKHOLDERS. At the Closing, Seller shall deliver the written agreement of each of its stockholders to be bound by this Section 8 as if they were Seller hereunder (the "Seller Stockholder Agreement"). 8.05 MISCELLANEOUS. (a) Seller acknowledges and agrees that, by virtue of the extraordinary value of the proprietary information and confidential records, its access to and use of such information and records, and their unique knowledge of and contacts relating to the Company and the Business, any violation by any of them of the undertakings contained in this Section 8 would cause the Purchaser and the Company immediate, substantial and irreparable injury for which it has no adequate remedy at law. Accordingly, Seller agrees and consents to the entry of an injunction or other equitable relief by a court of competent jurisdiction restraining any violation or threatened violation of any undertaking contained in this Section 8. Seller waives posting by the Purchaser of any bond or any proof of actual damages otherwise necessary to secure such injunction or other equitable relief. Rights and remedies provided for in this Section 8.05(a) are cumulative and shall be in addition to rights and remedies otherwise available to the Parties or under any other agreement or applicable Laws. (b) If any provision of this Section 8 or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law. If any provision of this Section 8, or any part thereof, is held to be invalid or unenforceable because of the scope or duration of or the area covered by such provision, the Parties agree that the court making such determination shall reduce the scope, duration and/or area of such provision (and shall substitute appropriate provisions for any such invalid or unenforceable provisions) in order to make such provision enforceable to the fullest extent permitted by law and/or shall delete specific words and phrases, and such modified provision shall then be enforceable and shall be enforced. 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligations of Purchaser under Sections 2 and 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Purchaser: 9.01 REPRESENTATIONS AND WARRANTIES. Each and every representation and warranty of Seller contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if -21- qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 9.02 COMPLIANCE WITH COVENANTS. Seller shall have performed and observed in all material respects all covenants and agreements to be performed or observed by such parties, as applicable, under this Agreement at or before the Closing. 9.03 REGULATORY APPROVALS. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement shall have been obtained. 9.04 CONSENTS OF THIRD PARTIES. All consents from third parties necessary for the execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby shall have been obtained in writing. 9.05 NO VIOLATION OF ORDERS. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby or which imposes restrictions on Purchaser's right or ability to operate the businesses of the Company shall be in effect; and no action or proceeding before any Governmental Body shall have been instituted or, to the knowledge of Purchaser, threatened by any Governmental Body, or by any other Person, which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement or which seeks to impose restrictions on Purchaser's right or ability to operate the businesses of the Company, or seeks to require Purchaser to dispose of any of its businesses, operations, properties or assets or any claim relating to the equity of the Company and which in any such case has a reasonable likelihood of success in the reasonable opinion of counsel to Purchaser. 9.06 OPINION OF COUNSEL. Purchaser shall have received the opinion of counsel to Seller in the form of EXHIBIT A. 9.07 SELLER STOCKHOLDER AGREEMENT. Seller's stockholders shall have executed and delivered the Seller Stockholder Agreement. 9.08 OTHER CLOSING MATTERS. Purchaser shall have received such other supporting information in confirmation of the representations, warranties, covenants and agreements of Seller and the satisfaction of the conditions to Purchaser's obligation to close hereunder as Purchaser or its counsel may reasonably request. 10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of Seller under Sections 2 and 3 shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by Seller: -22- 10.01 REPRESENTATIONS AND WARRANTIES. Each and every representation and warranty of Purchaser contained in this Agreement, any Schedule or any certificate delivered pursuant hereto shall have been true and correct when made and shall be repeated at the Closing and (a) if qualified by materiality (or any variation of such term), shall be true and correct as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct as of that date, and (b) if not qualified by materiality (or any variation of such term), shall be true and correct in all material respects as of the Closing Date, except that any such representations and warranties that are made as of a specified date shall only be required to be true and correct in all material respects as of that date. 10.02 COMPLIANCE WITH COVENANTS. Purchaser shall have performed and observed in all material respects all covenants and agreements to be performed or observed by it under this Agreement at or before the Closing. 10.03 REGULATORY APPROVALS. All material approvals and consents of regulatory authorities required to carry out the transactions contemplated by this Agreement shall have been obtained. 10.04 CONSENTS OF THIRD PARTIES. All consents from third parties necessary for the execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby shall have been obtained in writing. 10.05 NO VIOLATION OF ORDERS. No preliminary or permanent injunction or other order issued by Governmental Body, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any Governmental Body, that declares this Agreement invalid or unenforceable in any material respect or that prevents the consummation of the transactions contemplated hereby shall be in effect. 10.06 OTHER CLOSING MATTERS. Seller shall have received such other supporting information in confirmation of the representations, warranties, covenants and agreements of Purchaser and the satisfaction of the conditions to Seller's obligations to close hereunder as Seller or its counsel may reasonably request. 11. TERMINATION OF AGREEMENT. 11.01 CONDITIONS FOR TERMINATION. This Agreement may be terminated: (a) at any time prior to the Closing, by mutual consent of Purchaser and Seller; (b) by Purchaser or Seller if the Closing shall not have been consummated by one hundred eighty (180) days after the date hereof, unless such failure of consummation shall be due to a material breach of any representation or warranty, or the nonfulfillment in a material respect, and failure to cure such nonfulfillment, of any covenant or agreement contained herein on the part of the party or parties seeking to terminate this Agreement; or (c) by Purchaser or Seller if the other fails to cure a material breach of any provision of this Agreement within fifteen days after its receipt of written notice of such -23- breach from the non-breaching party, provided, however, that Purchaser or Seller shall not be entitled to terminate this Agreement pursuant to this Section 11.01(c) if they are also in material breach of any provision of this Agreement. 11.02 EFFECT OF TERMINATION. Upon the termination of this Agreement for any reason, Purchaser and Seller shall have no liability or further obligations arising out of this Agreement except for any liability resulting from an intentional breach of a representation, warranty or covenant contained in this Agreement prior to termination. Furthermore, the provisions of Section 12 shall survive any termination of this Agreement. 12. GENERAL PROVISIONS 12.01 COMMONLY USED TERMS. Unless the context clearly indicates otherwise, the terms below mean the following: (a) "Hereof" and "herein" refer to this Agreement. (b) "Including" means including, without limitation, whether or not so expressed. (c) References to Sections, Exhibits, and Schedules mean, respectively, Sections, Exhibits, and Schedules of this Agreement. (d) Words denoting the singular include the plural and vice versa. (e) "It" or "its" or words denoting any gender include all genders. 12.02 NOTICES. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be (i) sent by registered or certified mail, return receipt requested, (ii) hand delivered or (iii) sent by prepaid overnight carrier, with a record of receipt, to the Parties at the following addresses (or at such other addresses as shall be specified by the Parties by like notice): (a) if to the Purchaser: General Maritime Ship Holdings Ltd. 35 West 56th Street New York, NY 10019 Attn: Mr. Peter C. Georgiopoulos Telecopy: (212) 763-5602 Confirm: (212) 763-5620 with a copy to: Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, New York 10022 Attn: Thomas E. Molner, Esq. -24- Telecopy: (212) 715-8000 Confirm: (212) 715-9100 Niki J. Gouzouassi, Esq. Paul C. Avrameas and Partners 131 Filonos Street 185 36 Piraeus Greece (b) if to the Seller: United Projects Shipping & Financial Inc. ---------------------- ---------------------- ---------------------- with a copy to: Io Grekoussi, Esq. Roussos & Hatzidmitriou 5-7 Filellinon Street 185 36 Piraeus Greece Each notice or communication shall be deemed to have been given on the date received. 12.03 HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 12.04 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof. 12.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns and is not intended to confer upon any other Person any rights or remedies hereunder. 12.06 GOVERNING LAW. This Agreement shall be governed, including, without limitation, as to validity, interpretation and effect, by the internal laws of the State of New York, without regard to the principles of conflicts of laws. 12.07 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute a single agreement. Signed facsimile copies of this Agreement will legally bind the Parties to the same extent as original documents. -25- 12.08 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MAY BE (BUT SHALL NOT BE REQUIRED TO BE) BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE PARTIES FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH OF THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 12.09 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either Party without the prior written consent of the other Party; PROVIDED, however, that Purchaser may assign any of its rights hereunder to any affiliate of Purchaser which assumes the corresponding obligations of Purchaser hereunder, but no such assignment shall relieve Purchaser of any such obligations. No Party shall be relieved of any liability arising hereunder in respect of any assignment pursuant to this Section, unless such assignor has received a written release expressly excepting such assignor from any liability that may arise hereunder. 12.10 WAIVER; AMENDMENT. No waiver of any term, condition or obligation of this Agreement shall be valid unless in writing and signed by the waiving party. No failure or delay by either Party at any time to require the other Party to perform strictly in accordance with the terms hereof shall preclude any party from requiring performance by the other Party at any later time. No waiver of any one or several of the terms, conditions or obligations of this Agreement, and no partial waiver thereof, shall be construed as a waiver of any of the other terms, conditions or obligations of this Agreement. This Agreement may not be amended, changed or modified in any fashion except by written instrument signed by each of the Parties. 12.11 FEES AND EXPENSES. Except as otherwise expressly set forth herein, all fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or expenses. Seller shall bear and pay all Taxes that arise out of or as a result of the consummation of this Agreement. 12.12 NO THIRD PARTY BENEFICIARY RIGHTS. No provisions of this Agreement are intended, nor will be interpreted, to provide or create any third party beneficiary rights or other rights of any kind in any client, customer, affiliate, stockholder or partner of either Party or any other Person unless specifically provided otherwise herein, and, except as so provided, all provisions hereof will be personal solely between the Parties. 12.13 NEGOTIATED AGREEMENT. The Parties acknowledge that each of them has been advised and represented by counsel in the negotiation, execution and delivery of this Agreement and accordingly agree that if an ambiguity exists with respect to any provision of this -26- Agreement, such provision shall not be construed against either Party because such Party or its representatives drafted such provision. 12.14 PUBLIC ANNOUNCEMENTS. Neither Party shall make any press release or public announcement concerning this Agreement or the transactions contemplated hereby without the prior written approval of the other Party. 12.15 REMEDIES CUMULATIVE. Subject to Section 7.05, the remedies provided for or permitted by this Agreement shall be cumulative, and the exercise by either Party of any remedy provided for herein shall not preclude the assertion or exercise by such Party of any other right or remedy provided for herein, under applicable Laws, at equity, or otherwise. 12.16 SEVERABILITY. Subject to the specific provisions of Section 8.05(b), if any provision of this Agreement shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as to such jurisdiction only as if any such invalid or unenforceable provision were not contained herein. 12.17 JURY TRIAL WAIVER. Each of the Parties hereby irrevocably waives all right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or the transactions contemplated hereby. [SIGNATURE PAGE FOLLOWS.] -27- IN WITNESS WHEREOF, each Party hereto has duly executed this Agreement as of the date first above written. UNITED PROJECTS SHIPPING & FINANCIAL INC. By: /s/ L.K. Hatzimichalis ----------------------------------------- Name: L.K. Hatzimichalis Title: President GENERAL MARITIME SHIP HOLDINGS LTD By: /s/ Peter C. Georgiopoulos ----------------------------------------- Name: Peter C. Georgiopoulos Title: Chairman and Chief Executive Officer -28- LISTS OF EXHIBITS AND SCHEDULES TO ASSET PURCHASE AGREEMENT* EXHIBITS: Exhibit A - Opinion of Counsel SCHEDULES: Schedule 4.01(a) - Jurisdictions Schedule 4.05(a) - Financial Statements Schedule 4.05(b) - Interim Financial Statements Schedule 4.05(c) - Balance Sheet Schedule 4.10 - List of Customers Schedule 4.11(a) - Contracts Schedule 4.17(a) - Real Property Leases Schedule 4.19 - Insurance Schedule 4.21 - Employees and Independent Contractors Schedule 4.22 - Licenses and Permits * Omitted Schedules and Exhibits will be furnished supplementally to the Commission upon request. -29- EX-10.35 22 a2050304zex-10_35.txt EXHIBIT 10.35 Exhibit 10.35 FIRST ORIGINAL ---------------------------------------------- Norwegian Shipbrokers' Association's Memo- MEMORANDUM OF AGREEMENT randum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956 Code-name Dated: 7th May 2001 SALEFORM 1993 Revised 1966, 1983 and 1986/87 ---------------------------------------------- Scanobo Endurance Shipping Corp., Monrovia hereinafter called the Sellers, have agreed to sell, and General Maritime Corporation, a Marshall Islands Corporation hereinafter called the Buyers, have agreed to buy Name: SCF Endurance Classification Society/Class: DNV BC HC/E or Tanker for oil ESP PP3 EO Built 1991 By: Hyundai Heavy Industries, Ulsan, South Korea Flag. Liberian Place of Registration: Monrovia, Liberia Call Sign: ELOB4 Grt/Nrt: 57082/25449 Register Number: 9507 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the county of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 29,220,000 (United States Dollars twenty nine million, two hundred and twenty thousand) 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10 % (ten per cent) of the Purchase Price within 3 (Three) banking days from the date of this Agreement being signed on the fax and all subjects lifted, whichever the later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in exchange for the delivery documents reasonably required by the buyers in full free of bank charges to Sellers New York Bank on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. The day on which the notice of readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in New York on March 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 15,7, 5, and 3 days approximate notice of the estimated time of arrival at the intended place of /underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with this Agreement including documentation reasonably required for registration, the Sellers shall give the Buyers a written Notice of Readiness for delivery, by facsimile and e-mail b) The Vessel shall be delivered and taken over charter and cargo free safety afloat at one accessible berth at/in one safe port in the United States East Coast / United States Gulf / UK or Cont/Med not east of Greece range (which port must be suitable for and where a class approved diver and surveyor are located It is expected that such port will be the next discharge port (or other mutually agreed place) after the Buyers IPO is completed in the Sellers' option. Expected time of delivery; Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 60 Days after the Buyers IPO completed as per clause 21 herein, in Buyers option c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. a) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection See Clause 17 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale as well as the following additional items (including items on hire): Unitor Gas Bottles Videotol Library The Buyers shall take over the remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums or storage tanks and pay the sellers net purchase price including discounts (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents us provided in clause 3 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 22 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery See clause 18 The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers if the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, the Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at to be agreed on or about to be agreed These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17 - 22 inclusive attached hereto are to form an integral part of this agreement This document is a computer generated copy of "SALEFORM 1993", printed by authority or the Norwegian Shipbrokers' Association, using software which is the copyright of Strategic Software Ltd. Any insertion or deletion to the form must be clearly visable. In the even of any modification made to the preprinted text of this document, the original document shall apply. The Norwegian Shipbrokers' Association and Strategic Software Ltd. assume no responsibility for any loss or damage caused as a result of discrepancies between the original approved document and this document. ADDITIONAL CLAUSES TO M/V "SCF ENDURANCE" MOA DATED 7th MAY 2001 Clause 17 The vessel is to be delivered freshly drydocked and with DNV special survey passed. Buyers have the right to attend the drydock at their own risk and expense without the interference to Sellers works and to be permitted to paint the vessel and carry out other minor works whilst the ship is in drydock. Any works ordered by the Buyer shall always be for Buyers costs but shall be coordinated not to interfere with the Sellers works and never to delay the Sellers schedules or the delivery of the Vessel. Any Buyers work is subject to the permission of the sellers which not to be unreasonably withheld. a) In the event that the Sellers works are completed prior to the Buyers completing their painting / other works, then the Sellers shall have the right to tender notice of readiness for delivery or would be but for the Buyers works. In the event that the buyers take delivery of the vessel in the drydock then the cost of docking and undocking the vessel are to remain for the sellers account and the buyers will be responsible for any drydock dues from the time of delivery until the vessel is undocked. If Sellers works are completed prior to the Buyers works, if any but the Buyers works are completed prior to the expiration of the 3 days Notice of Readiness, then it shall be the Sellers responsibility to shift the Vessel from the drydock to the place of delivery but only provided this can be completed prior to the expiry of the 3 day period. b) It the buyers accept delivery of the vessel in drydock, the sellers shall deliver to the buyers at the time of closing evidence that the drydock, shipyard or other similar facility has waived any right to detain, arrest or attach the vessel for any financial obligation of the sellers to such drydock, shipyard or other similar facility. Clause 18 The class and national and international trading certificates including Solas, IMS, and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. At the time of delivery, the vessel will be in Class without any recommendation or notation affecting class. The vessel will be in such a condition that neither the port state nor flag state authorities at the port where the vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. ADDITIONAL CLAUSES TO M/V "SCF ENDURANCE" MOA DATED 7TH MAY 2001 Clause 19 Buyers are to employ crew and officers including Master, First Mate, and Chief Engineer for a minimum of two years from delivery on such terms and conditions mutually agreed to Buyers and Unicorn Cyprus based on separate crew management agreement. Unicom are to have the option to terminate the crew management agreement, ship by ship on giving three months notice for each ship, which may be given not less than 12 months from delivery. Clause 20 Vessel is not obliged to deliver free of slops. Clause 21 This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value US$.01 per share not later than 15th June, 2001 Clause 22 SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: (ii) Bill of Sale (four executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by _____________law. 2) Commercial Invoice describing the Vessel the date of the MOA and the price, excluding bunkers and lubricants. 3) Bunkers Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the shareholders certified by the corporate Secretary and authenticated by a Notary Public: (i) approving and ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's offices or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding this sale. 5) Power of Attorney duly authenticated by a Notary Public ADDITIONAL CLAUSES TO M/V "SCF ENDURANCE" MOA DATED 7TH MAY 2001 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than two (2) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations as to Class. 12) Certificate of Corporate Good Standing of the Seller. 13) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 14) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the delivery date confirming that the vessel is free of recorded mortgages, liens or other encumbrances. 15) Seller's confirmation that, to the best of their knowledge the Vessel: (i) Has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) Is not blacklisted by the United States of America or any other government, state, country or political sub-division thereof. 16) Protocol of Delivery and Acceptance. 17) If the vessel is not re-registered in Liberia, Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery from the seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and authenticated by a Notary Public: (i) Approving and ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery, and Acceptance (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorising an Officer or any attorney-in-fact to documents the Vessel under the laws of the Republic of ________________. ADDITIONAL CLAUSES TO M/V "SCF ENDURANCE" MOA DATED 7TH MAY 2001 2) Powers of Attorney duly authenticated by a Notary Public. 3) Instructions to the Seller's bank authorising the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90% purchase price and (ii) bunkers and lubricants, in a manner to be mutually agreed. /s/ Yuri Privalov Yuri Privalov AS AGENTS FIONA MARITIME AGENCIES LTD /s/ Peter C. Georgiopoulos For the Buyers For the Sellers General Maritime Corporation Scanobo Endurance Shipping Corp., A Marshall Islands Corporation Monrovia EX-10.36 23 a2050304zex-10_36.txt EXHIBIT 10.36 Exhibit 10.36 FIRST ORIGINAL ---------------------------------------------- Norwegian Shipbrokers' Association's Memo- MEMORANDUM OF AGREEMENT randum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956. Code-name Dated: 7th May 2001 SALEFORM 1993 Revised 1966, 1983 and 1986/87 ---------------------------------------------- Scanobo Trader Shipping Corp., Monrovia hereinafter called the Sellers, have agreed to sell, and General Maritime Corporation, a Marshall Islands Corporation hereinafter called the Buyers, have agreed to buy Name: SCF Trader Classification Society/Class: DNV Built: 1991 By: Hyundai Heavy Industries, Ulsan, South Korea Flag: Liberian Place of Registration: Monrovia, Liberia Call Sign: ELNX7 Grt/Nrt: 57082/25449 Register Number: 9478 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 29,220,000 (United States Dollars twenty nine million, two hundred and twenty thousand) 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10 % (ten per cent) of the Purchase Price within 3 (Three) banking days from the date of this Agreement being signed on the fax and all subjects lifted, whichever the later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in exchange for the delivery documents reasonably required by the buyers in full free of bank charges to Sellers New York Bank on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5.The day on which the notice of readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Norfolk in April 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and 4b) are alternatives; delete whichever is not applicable In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 15, 7, 5, and 3 days approximate notice of the estimated time of arrival at the intended place of /underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with this Agreement including documentation reasonably required for registration, the Sellers shall give the Buyers a written Notice of Readiness for delivery, by facsimile and e-mail b) The Vessel shall be delivered and taken over charter and cargo free safely afloat at one accessible berth at/in one safe port in the United States East Coast / United States Gulf / UK or Cont/Med not east of Greece range (which port must be suitable for and where a class approved diver and surveyor are located. It is expected that such port will be the next discharge port (or other mutually agreed place) after the Buyers IPO is completed (see clause 21) in the Sellers' option. Expected time of delivery: Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 60 Days after the Buyers IPO completed as per clause 21 herein, in Buyers option c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection See Clause 17 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): Unitor Gas Bottles Videotol Library The Buyers shall take over the remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums or storage tanks and pay the sellers net purchase price including discounts (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents as provided in clause 3 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 22 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery See clause 18 The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If alter Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, the Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at to be agreed on or about to be agreed These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17 - 22 inclusive attached hereto are to form an integral part of this agreement This document is a computer generated copy of "SALEFORM 1993". printed by authority or the Norwegian Shipbrokers' Association, using software which is the copyright of Strategic Software Ltd. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the preprinted text of this document, the original document shall apply. The Norwegian Shipbrokers' Association and Strategic Software Ltd. assume no responsibility for any loss or damage caused as a result of discrepancies between the original approved document and this document. ADDITIONAL CLAUSES TO M/V "SCF TRADER" MOA DATED 7th MAY 2001 Clause 17 The vessel is to be delivered freshly drydocked and with DNV special survey passed. Buyers have the right to attend the drydock at their own risk and expense without the interference to Sellers works and to be permitted to paint the vessel and carry out other minor works whilst the ship is in drydock. Any works ordered by the Buyer shall always be for Buyers costs but shall be coordinated not to interfere with the Sellers works and never to delay the Sellers schedules or the delivery of the Vessel. Any Buyers work is subject to the permission of the sellers which not to be unreasonably withheld. a) In the event that the Sellers works are completed prior to the Buyers completing their painting / other works, then the Sellers shall have the right to tender notice of readiness for delivery or would be but for the Buyers works. In the event that the buyers take delivery of the vessel in the drydock then the cost of docking and undocking the vessel are to remain for the sellers account and the buyers will be responsible for any drydock dues from the time of delivery until the vessel is undocked. If Sellers works are completed prior to the Buyers works, if any but the Buyers works are completed prior to the expiration of the 3 days Notice of Readiness, then it shall be the Sellers responsibility to shift the Vessel from the drydock to the place of delivery but only provided this can be completed prior to the expiry of the 3 day period. b) It the buyers accept delivery of the vessel in drydock, the sellers shall deliver to the buyers at the time of closing evidence that the drydock, shipyard or other similar facility has waived any right to detain, arrest or attach the vessel for any financial obligation of the sellers to such drydock, shipyard or other similar facility. Clause 18 The class and national and international trading certificates including Solas, IMS, and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery if the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. At the time of delivery, the vessel will be in Class without any recommendation or notation affecting class. The vessel will be in such a condition that neither the port state nor flag state authorities at the port where the vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. ADDITIONAL CLAUSES TO M/V "SCF TRADER" MOA DATED 7TH MAY 2001 Clause 19 Buyers are to employ crew and officers including Master, First Mate, and Chief Engineer for a minimum of two years from delivery on such terms and conditions mutually agreed to Buyers and Unicom Cyprus based on separate crew management agreement. Unicom are to have the option to terminate the crew management agreement, ship by ship on giving three months notice for each ship, which may be given not less than 12 months from delivery. Clause 20 Vessel is not obliged to deliver free of slops. Clause 21 This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value US$.01 per share not later than 15th June, 2001 Clause 22 SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: (ii) Bill of Sale (four executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by _____________law. 2) Commercial invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants. 3) Bunkers Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the shareholders certified by the corporate Secretary and authenticated by a Notary Public: (i) approving and ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's offices or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding this sale. 5) Power of Attorney duly authenticated by a Notary Public ADDITIONAL CLAUSES TO M/V "SCF TRADER" MOA DATED 7TH MAY 2001 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws 7) Certificate from the Vessel's classification society dated not more than two (2) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations as to Class. 12) Certificate of Corporate Good Standing of the Seller. 13) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 14) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the delivery date confirming that the vessel is free of recorded mortgages, liens or other encumbrances. 15) Seller's confirmation that, to the best of their knowledge the Vessel: (i) Has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) Is not blacklisted by the United States of America or any other government, state, country or political sub-division thereof. 16) Protocol of Delivery and Acceptance. 17) If the vessel is not re-registered in Liberia, Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery from the seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and authenticated by a Notary Public: (i) Approving and ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery, and Acceptance(b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorising an Officer or any attorney-in-fact to documents the Vessel under the laws of the Republic of ________________. ADDITIONAL CLAUSES TO M/V "SCF TRADER" MOA DATED 7TH MAY 2001 2) Powers of Attorney duly authenticated by a Notary Public. 3) Instructions to the Seller's bank authorising the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90% purchase price and (ii) bunkers and lubricants, in a manner to be mutually agreed. /s/ Yuri Privalov Yuri Privalov AS AGENTS FIONA MARITIME AGENCIES LTD /s/ Peter C. Georgiopoulos For the Buyers For the Sellers General Maritime Corporation Scanobo Endurance Shipping Corp., A Marshall Islands Corporation Monrovia EX-10.37 24 a2050304zex-10_37.txt EXHIBIT 10.37 Exhibit 10.37 FIRST ORIGINAL ---------------------------------------------- Norwegian Shipbrokers' Association's Memo- MEMORANDUM OF AGREEMENT randum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956 Code-name Dated: 7th May 2001 SALEFORM 1993 Revised 1966, 1983 and 1986/87. ---------------------------------------------- Scanobo Challenger Shipping Corp., Monrovia hereinafter called the Sellers, have agreed to sell, and General Maritime Corporation, a Marshall Islands Corporation hereinafter called the Buyers, have agreed to buy Name: SCF Challenger Classification Society/Class: DNV BC HC/E or Tanker for oil ESP PP3 EO Built: 1991 By: Hyundai Heavy Industries, Ulsan, South Korea Flag: Liberian Place of Registration: Monrovia, Liberia Call Sign: ELNX6 Grt/Nrt: 57082/25449 Register Number: 9477 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, telefax and other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 29,220,000 (United States Dollars twenty nine million, two hundred and twenty thousand) 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10 % (ten per cent) of the Purchase Price within 3 (Three) banking days from the date of this Agreement being signed on the fax and all subjects lifted, whichever the later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in exchange for the delivery documents reasonably required by the buyers in full free of bank charges to Sellers New York Bank on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. The day on which the notice of readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Brazil on April 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 15,7, 5 , and 3 days approximate notice of the estimated time of arrival at the intended place of underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with this Agreement including documentation reasonably required for registration, the Sellers shall give the Buyers a written Notice of Readiness for delivery, by facsimile and e-mail b) The Vessel shall be delivered and taken over charter and cargo free safely afloat at one accessible berth at/in one safe port in the United States East Coast / United States Gulf / UK or Cont/Med not east of Greece range (which port must be suitable for and where a class approved diver and surveyor are located. It is expected that such port will be the next discharge port (or other mutually agreed place) after the Buyers IPO is completed (see clause 21) in the Sellers' option. Expected time of delivery: Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14); 60 Days after the Buyers IPO completed as per clause 21 herein, in Buyers option c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection See Clause 17 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): Unitor Gas Bottles Videotol Library The Buyers shall take over the remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums or storage tanks and pay the sellers net purchase price including discounts (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents as provided in clause 3 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents namely: See clause 22 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery See clause 18 The vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, the Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at to be agreed on or about to be agreed. These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17 - 22 inclusive attached hereto are to form an integral part of this agreement This document is a computer generated copy of "SALEFORM 1993", printed by authority or the Norwegian Shipbrokers' Association, using software which is the copyright of Strategic Software Ltd. Any insertion or deletion to the form must be clearly visable. In the event of any modification made to the preprinted text of this document, the original document shall apply. The Norwegian Shipbrokers' Association and Strategic Software Ltd. assume no responsibility for any loss or damage caused as a result of discrepancies between the original approved document and this document. ADDITIONAL CLAUSES TO M/V "SCF CHALLENGER" MOA DATED 7th MAY 2001 Clause 17 The vessel is to be delivered freshly drydocked and with DNV special survey passed. Buyers have the right to attend the drydock at their own risk and expense without the interference to Sellers works and to be permitted to paint the vessel and carry out other minor works whilst the ship is in drydock. Any works ordered by the Buyer shall always be for Buyers costs but shall be coordinated not to interfere with the Sellers works and never to delay the Sellers schedules or the delivery of the Vessel. Any Buyers work is subject to the permission of the sellers which not to be unreasonably withheld. a) In the event that the Sellers works are completed prior to the Buyers completing their painting / other works, then the Sellers shall have the right to tender notice of readiness for delivery or would be but for the Buyers works. In the event that the buyers take delivery of the vessel in the drydock then the cost of docking and undocking the vessel are to remain for the sellers account and the buyers will be responsible for any drydock dues from the time of delivery until the vessel is undocked. If Sellers works are completed prior to the Buyers works, if any but the Buyers works are completed prior to the expiration of the 3 days Notice of Readiness, then it shall be the Sellers responsibility to shift the Vessel from the drydock to the place of delivery but only provided this can be completed prior to the expiry of the 3 day period. b) It the buyers accept delivery of the vessel in drydock, the sellers shall deliver to the buyers at the time of closing evidence that the drydock, shipyard or other similar facility has waived any right to detain, arrest or attach the vessel for any financial obligation of the sellers to such drydock, shipyard or other similar facility. Clause 18 The class and national and international trading certificates including Solas, IMS, and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. At the time of delivery, the vessel will be in Class without any recommendation or notation affecting class. The vessel will be in such a condition that neither the port state nor flag state authorities at the port where the vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. ADDITIONAL CLAUSES TO M/V "SCF CHALLENGER" MOA DATED 7TH MAY 2001 Clause 19 Buyers are to employ crew and officers including Master, First Mate, and Chief Engineer for a minimum of two years from delivery on such terms and conditions mutually agreed to Buyers and Unicom Cyprus based on separate crew management agreement. Unicom are to have the option to terminate the crew management agreement, ship by ship on giving three months notice for each ship, which may be given not less than 12 months from delivery. Clause 20 Vessel is not obliged to deliver free of slops. Clause 21 This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value US$.01 per share not later than 15th June, 2001 Clause 22 SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: (ii) Bill of Sale (four executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by _____________law. 2) Commercial Invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants. 3) Bunkers Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the shareholders certified by the corporate Secretary and authenticated by a Notary Public: (i) approving and ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's offices or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding this sale. 5) Power of Attorney duly authenticated by a Notary Public ADDITIONAL CLAUSES TO M/V "SCF CHALLENGER" MOA DATED 7TH MAY 2001 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than two (2) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations as to Class. 12) Certificate of Corporate Good Standing of the Seller. 13) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 14) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the delivery date confirming that the vessel is free of recorded mortgages, liens or other encumbrances. 15) Seller's confirmation that, to the best of their knowledge the Vessel: (i) Has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) Is not blacklisted by the United States of America or any other government, state, country or political sub-division thereof. 16) Protocol of Delivery and Acceptance. 17) If the vessel is not re-registered in Liberia, Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery from the seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and authenticated by a Notary Public: (i) Approving and ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery, and Acceptance (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorising an Officer or any attorney-in-fact to documents the Vessel under the laws of the Republic of ________________. ADDITIONAL CLAUSES TO M/V "SCF CHALLENGER" MOA DATED 7TH MAY 2001 2) Powers of Attorney duly authenticated by a Notary Public. 3) Instructions to the Seller's bank authorising the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90% purchase price and (ii) bunkers and lubricants, in a manner to be mutually agreed. /s/ Yuri Privalov Yuri Privalov AS AGENTS FIONA MARITIME AGENCIES LTD /s/ Peter C. Georgiopoulos For the Buyers For the Sellers General Maritime Corporation Scanobo Challenger Shipping Corp., A Marshall Islands Corporation Monrovia EX-10.38 25 a2050304zex-10_38.txt EXHIBIT 10.38 Exhibit 10.38 FIRST ORIGINAL ---------------------------------------------- Norwegian Shipbrokers' Association's Memo- MEMORANDUM OF AGREEMENT randum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956 Code-name Dated: 7th May 2001 SALEFORM 1993 Revised 1966, 1983 and 1986/87 ---------------------------------------------- Scanobo Trust Shipping Corp., Monrovia hereinafter called the Sellers, have agreed to sell, and General Maritime Corporation, a Marshall Islands Corporation hereinafter called the Buyers, have agreed to buy Name: SCF Trust Classification Society/Class: DNV BC HC/E or Tanker for oil ESP PP3 EO Built: 1992 By: Hyundai Heavy Industries, Ulsan, South Korea Flag: Liberian Place of Registration: Monrovia, Liberia Call Sign: ELOC4 Grt/Nrt: 57082/25449 Register Number: 9515 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the county of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 31,210,000 (United States Dollars thirty one million ,two hundred and ten thousand) 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10 % (ten per cent) of the Purchase Price within 3 (Three) banking days from the date of this Agreement being signed on the fax and all subjects lifted, whichever the later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in exchange for the delivery documents reasonably required by the buyers in full free of bank charges to Sellers New York Bank on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. The day on which the notice of readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Baltimore in April 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 15, 7, 5, and 3 days approximate notice of the estimated time of arrival at the intended place of underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with this Agreement, including documentation usually required for registration the Sellers shall give the Buyers a written Notice of Readiness for delivery, by facsimile and e-mail b) The Vessel shall be delivered and taken over charter and cargo free safety afloat at one accessible berth at/in one safe port in the United States East Coast / United States Gulf / UK or Cont/Med not east of Greece range (which port must be suitable for and where a class approved diver and surveyor are located. It is expected that such port will be the next discharge port (or other mutually agreed place) after the Buyers IPO is completed (see clause 21) in the Sellers' option. Expected time of delivery: Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 45 Days after the Buyers IPO completed as per clause 21 herein, in Buyers option c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. a) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection See Clause 17 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale as well as the following additional items (including items on hire) Unitor Gas Bottles Videotol Library The Buyers shall take over the remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums or storage tanks and pay the sellers net purchase price including discounts (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents us provided in clause 3 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 22 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery See clause 18 The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers if the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, the Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at to be agreed on or about to be agreed These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17 - 22 inclusive attached hereto are to form an integral part of this agreement This document is a computer generated copy of "SALEFORM 1993", printed by authority or the Norwegian Shipbrokers' Association, using software which is the copyright of Strategic Software Ltd. Any insertion or deletion to the form must be clearly visible. In the even of any modification made to the preprinted text of this document, the original document shall apply. The Norwegian Shipbrokers' Association and Strategic Software Ltd. assume no responsibility for any loss or damage caused as a result of discrepancies between the original approved document and this document. ADDITIONAL CLAUSES TO M/V "SCF TRUST" MOA DATED 7TH MAY 2001 Clause 17 a) No Drydocking. Prior to delivery and at the port of delivery, the Buyers have the right to arrange at their expense for the relevant class approved diver(s) to inspect the vessels bottom and other underwater parts below the summer load line, using video equipment with a class surveyor and Sellers and Buyers representatives in attendance on board the Vessel. If the conditions at the port of delivery are unsuitable to the class surveyor for such inspection the Sellers shall make the Vessel available at a suitable alternative place near to delivery port to the satisfaction of the divers and class survey. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage. b) In the event that the divers locate damage or defects which affects the Vessels clean condition of class and requires her to be drydocked promptly for repair, or in the event that the class survey finds that the vessel must be drydocked for further examination, then the Sellers shall arrange for the Vessel to be drydocked in accordance with clause 6 of NSF 93 and the Vessel shall proceed to a drydock, in ballast within the delivery range. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage, Owners to be permitted to drydock UK Cont Med in their option and are not obliged to drydock in the USA. c) In the event that the Vessel is drydocked under clause 6 b) and c) (which will be reinstated) of NSF 93, then the buyers shall have the right to attend at their own risk and expense and without interference to the Sellers works and to be permitted to paint the Vessel and to carry out other minor works whilst ship is drydocked irrespective of who pays for the drydocking costs. Such painting or any works ordered by the Buyer shall always be for the Buyers costs but shall be coordinated not to interfere with the Sellers works and never to delay Sellers schedule or the delivery of the Vessel. Any Buyers work is subject to the written permission of sellers, which not to be unreasonably withheld. d) In the event that the Sellers works are completed prior to the Buyers completing their painting/other works, then the Sellers shall have the right to tender notice of readiness for delivery whilst the Vessel is in drydock provided that the Vessel is in all other respects ready for delivery or would be but for the Buyers works. In the event that Buyers take delivery of the Vessel in the drydock then the cost of docking and undocking the vessel are to remain for Sellers account and the buyers would be responsible for any drydock dues from the time of the delivery until the vessel is undocked. If Sellers works are completed prior to Buyers works, if any but the Buyers works are completed prior to the expiration of the 3 days Notice of Readiness, then it shall be the Sellers responsibility to shift the Vessel from the drydock to the place of the delivery but only provided this can be completed prior to the expiry of the 3 day period. e) If the divers inspection reveals any breakdown, damage or defect to the rudder, propeller, bottom or other underwater parts of the vessel below the deepest loadline which would impose a Class condition or recommendation, but is deferred by Class until ADDITIONAL CLAUSES TO M/V "SCF TRUST" MOA DATED 7TH MAY 2001 the next scheduled dry docking, the purchase price of the Vessel will be reduced by an amount equal to the estimated cost to repair such a breakdown, damage or defect to the satisfaction of Class. The seller and the Buyer will each obtain a cost estimate from a reputable ship repair yard and from a mutually agreed third yard within the delivery range and the average cost of the three yards for the direct cost of repair shall be chosen. f) 1) If such repairs are deferred by Class until after delivery of the vessel under the MOA but prior to the Vessels next scheduled drydocking the buyers will have the option to:- 2) Accept the vessel with such defects together with a reduction of the purchase price predicated on an estimation to be obtained in accordance with the preceding paragraph, provided however that if the Vessel is required to be drydocked the estimate will include the cost of such drydocking; or defer acceptance of the vessel until repairs are completed by the seller to the satisfaction of class. Class shall be the final and sole arbiter of whether underwater damage, if any affects the vessel's class or indeed necessitates prompt drydocking/repair. 3) If the buyers accept delivery of the vessel in drydock, the sellers shall deliver to the buyers at the time of closing evidence that the drydock, shipyard or other similar facility has waived any right to detain, arrest of attach the Vessel for any financial obligation of the sellers to such drydock, shipyard or other similar facility. Clause 18 The class and national and international trading certificates including Solas, IMS, and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. At the time of delivery, the vessel will be in Class without any recommendation or notation affecting class. The vessel will be in such a condition that neither the port state nor flag state authorities at the port where the vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. Clause 19 Buyers are to employ crew and officers including Master, First Mate, and Chief Engineer for a minimum of two years from delivery on such terms and conditions mutually agreed by Buyers and Unicom Cyprus based on separate crew management agreement. Unicom are to have the option to terminate the crew management agreement, ship by ship on giving three months notice for each ship, which may be given not less than 12 months ADDITIONAL CLAUSES TO M/V "SCF TRUST" MOA DATED 7TH MAY 2001 from delivery. Clause 20 Vessel is not obliged to deliver free of slops. Clause 21 This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value US$.01 per share not later than 15th June, 2001. Clause 22 SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: (ii) Bill of Sale (four executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by ______________law. 2) Commercial Invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants. 3) Bunkers Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the shareholders certified by the corporate Secretary and authenticated by a Notary Public: (i) approving and ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's offices or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding this sale. 5) Power of Attorney duly authenticated by a Notary Public 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than two (2) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations as to Class. 12) Certificate of Corporate Good Standing of the Seller. ADDITIONAL CLAUSES TO M/V "SCF TRUST" MOA DATED 7TH MAY 2001 13) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 14) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the delivery date confirming that the vessel is free of recorded mortgages, liens or other encumbrances. 15) Seller's confirmation that, to the best of their knowledge the Vessel: (i) Has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) Is not blacklisted by the United States of America or any other government, state, country or political sub-division thereof. 16) Protocol of Delivery and Acceptance. 17) If the vessel is not re-registered in Liberia, Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery from the Seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and authenticated by a Notary Public: (i) Approving and ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery and Acceptance, (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorising an Officer or any attorney-in-fact to documents the Vessel under the laws of the Republic of_____________________. 2) Powers of Attorney duly authenticated by a Notary Public. ADDITIONAL CLAUSES TO M/V "SCF TRUST" MOA DATED 7TH MAY 2001 3) Instructions to the Seller's bank authorising the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90% purchase price and (ii) bunkers and lubricants, in a manner to be mutually agreed. /s/ Yuri Privalov Yuri Privalov AS AGENTS FIONA MARITIME AGENCIES LTD. /s/ Peter C. Georgiopoulos For the Buyers For the Sellers General Maritime Corporation Scanobo Trust Shipping Corp., A Marshall Islands Corporation Monrovia EX-10.39 26 a2050304zex-10_39.txt EXHIBIT 10.39 Exhibit 10.39 FIRST ORIGINAL MEMORANDUM OF AGREEMENT - -------------------------------------------------------------------------------- Norwegian Shipbrokers' Association's Memorandum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956. Code-name SALEFORM 1993 Revised 1966, 1983 and 1986/87. - -------------------------------------------------------------------------------- Dated 7th May 2001 Scanobo Champion Shipping Corp., Monrovia hereinafter called the Sellers, have agreed to sell, and General Maritime Corporation, a Marshall Islands Corporation hereinafter called the Buyers, have agreed to buy Name: SCF Champion Classification Society/Class: DNV BC HC/E or Tanker for oil ESP PP3 EO Built: 1992 By: Hyundai Heavy Industries, Ulsan, South Korea Flag: Liberian Place of Registration: Monrovia, Liberia Call Sign: EL0D2 Grt/Nrt: 57082/25449 Register Number: 9521 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 31,210,000 (United States Dollars thirty one million ,two hundred and ten thousand) 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10% (ten per cent) of the Purchase Price within 3 (Three) banking days from the date of this Agreement being signed on the fax and all subjects lifted, whichever the later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in exchange for the delivery documents reasonably required by the buyers in full free of bank charges to Sellers New York Bank on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. The day on which the notice of readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in New York in May 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 15, 7, 5, and 3 days approximate notice of the estimated time of arrival at the intended place of underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with this Agreement, including documentation usually required for registration the Sellers shall give the Buyers a written Notice of Readiness for delivery by facsimile and e-mail. b) The Vessel shall be delivered and taken over charter and cargo free safely afloat at one accessible berth at/in one safe port in the United States East Coast / United States Gulf / UK or Cont/Med not east of Greece range (which port must be suitable for and where a class approved diver and surveyor are located. It is expected that such port will be the next discharge port (or other mutually agreed place) after the Buyers IPO is completed in the Sellers' option. Expected time of delivery: Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 45 Days after the Buyers IPO completed as per clause 21 herein, in Buyers option c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection See Clause 17 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): Unitor Gas Bottles Videotol Library The Buyers shall take over the remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums or storage tanks and pay the sellers net purchase price including discounts (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents as provided in clause 3 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 22 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery See clause 18 The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, the Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at to be agreed on or about to be agreed These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17-22 inclusive attached hereto are to form an integral part of this agreement This document is a computer generated copy of "SALEFORM 1993", printed by authority of the Norwegian Shipbrokers' Association, using software which is the copyright of Strategic Software Ltd. Any insertion or deletion to the form must be clearly visible. In the event or any modification made to the preprinted text of this document, the original document shall apply. The Norwegian Shipbrokers' Association and Strategic Software Ltd. assume no responsibility for any loss or damage caused as a result of discrepancies between the original approved document and this document. ADDITIONAL CLAUSES TO M/V "SCF CHAMPION" MOA DATED 7TH MAY 2001 Clause 17 a) No Drydocking. Prior to delivery and at the port of delivery, the Buyers have the right to arrange at their expense for the relevant class approved diver(s) to inspect the vessels bottom and other underwater parts below the summer load line, using video equipment with a class surveyor and Sellers and Buyers representatives in attendance on board the Vessel. If the conditions at the port of delivery are unsuitable to the class surveyor for such inspection the Sellers shall make the Vessel available at a suitable alternative place near to delivery port to the satisfaction of the divers and class surveyor. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage. b) In the event that the divers locate damage or defects which affects the Vessels clean condition of class and requires her to be drydocked promptly for repair, or in the event that the class survey finds that the vessel must be drydocked for further examination, then the Sellers shall arrange for the Vessel to be drydocked in accordance with clause 6 of NSF 93 and the Vessel shall proceed to a drydock, in ballast within the delivery range. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage, Owners to be permitted to drydock UK Cont Med in their option and are not obliged to drydock in the USA. c) In the event that the Vessel is drydocked under clause 6 b) and c) (which will be reinstated) of NSF 93, then the buyers shall have the right to attend at their own risk and expense and without interference to the Sellers works and to be permitted to paint the Vessel and to carry out other minor works whilst ship is drydocked irrespective of who pays for the drydocking costs. Such painting or any works ordered by the Buyer shall always be for the Buyers costs but shall be coordinated not to interfere with the Sellers works and never to delay Sellers schedule or the delivery of the Vessel. Any Buyers work is subject to the written permission of sellers, which not to be unreasonably withheld. d) In the event that the Sellers works are completed prior to the Buyers completing their painting/other works, then the Sellers shall have the right to tender notice of readiness for delivery whilst the Vessel is in drydock provided that the Vessel is in all other respects ready for delivery or would be but for the Buyers works. In the event that Buyers take delivery of the Vessel in the drydock then the cost of docking and undocking the vessel are to remain for Sellers account and the buyers would be responsible for any drydock dues from the time of the delivery until the vessel is undocked. If Sellers works are completed prior to Buyers works, if any but the Buyers works are completed prior to the expiration of the 3 days Notice of Readiness, then it shall be the Sellers responsibility to shift the Vessel from the drydock to the place of the delivery but only provided this can be completed prior to the expiry of the 3 day period. e) If the divers inspection reveals any breakdown, damage or defect to the rudder, propeller, bottom or other underwater parts of the vessel below the deepest loadline which would impose a Class condition or recommendation, but is deferred by Class until ADDITIONAL CLAUSES TO M/V "SCF CHAMPION" MOA DATED 7TH MAY 2001 the next scheduled dry docking, the purchase price of the Vessel will be reduced by an amount equal to the estimated cost to repair such a breakdown, damage or defect to the satisfaction of Class. The seller and the Buyer will each obtain a cost estimate from a reputable ship repair yard and from a mutually agreed third yard within the delivery range and the average cost of the three yards for the direct cost of repair shall be chosen. f) 1) If such repairs are deferred by Class until after delivery of the vessel under the MOA but prior to the Vessels next scheduled drydocking the buyers will have the option to:- 2) Accept the vessel with such defects together with a reduction of the purchase price predicated on an estimation to be obtained in accordance with the preceding paragraph, provided however that if the Vessel is required to be drydocked the estimate will include the cost of such drydocking; or defer acceptance of the vessel until repairs are completed by the seller to the satisfaction of class. Class shall be the final and sole arbiter of whether underwater damage, if any affects the vessel's class or indeed necessitates prompt drydocking/repair. 3) If the buyers accept delivery of the vessel in drydock, the sellers shall deliver to the buyers at the time of closing evidence that the drydock, shipyard or other similar facility has waived any right to detain, arrest of attach the Vessel for any financial obligation of the sellers to such drydock, shipyard or other similar facility. Clause 18 The class and national and international trading certificates including Solas, IMS, and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. At the time of delivery, the vessel will be in Class without any recommendation or notation affecting class. The vessel will be in such a condition that neither the port state nor flag state authorities at the port where the vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. Clause 19 Buyers are to employ crew and officers including Master, First Mate, and Chief Engineer for a minimum of two years from delivery on such terms and conditions mutually agreed by Buyers and Unicom Cyprus based on separate crew management agreement. Unicom are to have the option to terminate the crew management agreement, ship by ship on giving three months notice for each ship, which may be given not less than 12 months ADDITIONAL CLAUSES TO M/V "SCF CHAMPION" MOA DATED 7TH MAY 2001 from delivery. Clause 20 Vessel is not obliged to deliver free of slops. Clause 21 This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value US$.01 per share not later than 15th June, 2001 Clause 22 SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: (ii) Bill of Sale (four executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by ______________law. 2) Commercial Invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants. 3) Bunkers Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the shareholders certified by the corporate Secretary and authenticated by a Notary Public: (i) approving and ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's offices or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding this sale. 5) Power of Attorney duly authenticated by a Notary Public 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than two (2) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations as to Class. ADDITIONAL CLAUSES TO M/V "SCF CHAMPION" MOA DATED 7TH MAY 2001 12) Certificate of Corporate Good Standing of the Seller. 13) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 14) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the delivery date confirming that the vessel is free of recorded mortgages, liens or other encumbrances. 15) Seller's confirmation that, to the best of their knowledge the Vessel: (i) Has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) Is not blacklisted by the United States of America or any other government, state, country or political sub-division thereof. 16) Protocol of Delivery and Acceptance. 17) If the vessel is not re-registered in Liberia, Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery from the Seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and authenticated by a Notary Public: (i) Approving and ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery and Acceptance, (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorising an Officer or any attorney-in-fact to documents the Vessel under the laws of the Republic of_____________________. 2) Powers of Attorney duly authenticated by a Notary Public. 3) Instructions to the Seller's bank authorising the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. ADDITIONAL CLAUSES TO M/V "SCF CHAMPION" MOA DATED 7TH MAY 2001 4) Payment confirmation of balance of (i) 90% purchase price and (ii) bunkers and lubricants, in a manner to be mutually agreed. /s/ Yuri Privalov Yuri Privalov AS AGENTS FIONA MARITIME AGENCIES LTD. /s/ Peter C. Georgiopoulos For the Buyers For the Sellers General Maritime Corporation Scanobo Champion Shipping Corp., A Marshall Islands Corporation Monrovia EX-10.40 27 a2050304zex-10_40.txt EXHIBIT 10.40 Exhibit 10.40 FIRST ORIGINAL MEMORANDUM OF AGREEMENT - -------------------------------------------------------------------------------- Norwegian Shipbrokers' Association's Memorandum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956. Code-name SALEFORM 1993 Revised 1966, 1983 and 1986/87. - -------------------------------------------------------------------------------- Dated 7th May 2001 Scanobo Spirit Shipping Corp., Monrovia hereinafter called the Sellers, have agreed to sell, and General Maritime Corporation, a Marshall Islands Corporation hereinafter called the Buyers, have agreed to buy Name SCF Spirit Classification Society/Class: DNV BC HC/E or Tanker for oil ESP PP3 EO Built: 1992 By: Hyundai Heavy Industries, Ulsan, South Korea Flag: Liberian Place of Registration: Monrovia, Liberia Call Sign: EL0C5 Grt/Nrt: 57082/25449 Register Number: 9516 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 31,210,000 (United States Dollars thirty one million ,two hundred and ten thousand) 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10 % (ten per cent) of the Purchase Price within 3 (Three) banking days from the date of this Agreement being signed on the fax and all subjects lifted, whichever the later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in exchange for the delivery documents reasonably required by the buyers in full free of bank charges to Sellers New York Bank on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. The day on which the notice of readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Baltimore in March 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 15, 7, 5, and 3 days approximate notice of the estimated time of arrival at the intended place of underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with this Agreement, including documentation usually required for registration the Sellers shall give the Buyers a written Notice of Readiness for delivery by facsimile and e-mail. b) The Vessel shall be delivered and taken over charter and cargo free safely afloat at one accessible berth at/in one safe port in the United States East Coast / United States Gulf / Uk or Cont/Med not east of Greece range (which port must be suitable for and where a class approved diver and surveyor are located. It is expected that such port will be the next discharge port (or other mutually agreed place) after the Buyers IPO is completed in the Sellers' option. Expected time of delivery: Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 45 Days after the Buyers IPO completed as per clause 21 herein, in Buyers option c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection See Clause 17 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): Unitor Gas Bottles Videotol Library The Buyers shall take over the remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums or storage tanks and pay the sellers net purchase price including discounts (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents as provided in clause 3 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 22 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take Copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery See clause 18 The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, the Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at to be agreed on or about to be agreed These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17-22 inclusive attached hereto are to form an integral part of this agreement This document is a computer generated copy of "SALEFORM 1993", printed by authority of the Norwegian Shipbrokers' Association, using software which is the copyright of Strategic Software Ltd. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the preprinted text of this document, the original document shall apply. The Norwegian Shipbrokers' Association and Strategic Software Ltd. assume no responsibility for any loss or damage caused as a result of discrepancies between the original approved document and this document. ADDITIONAL CLAUSES TO M/V "SCF SPIRIT" MOA DATED 7TH MAY 2001 Clause 17 a) No Drydocking. Prior to delivery and at the port of delivery, the Buyers have the right to arrange at their expense for the relevant class approved diver(s) to inspect the vessels bottom and other underwater parts below the summer load line, using video equipment with a class surveyor and Sellers and Buyers representatives in attendance on board the Vessel. If the conditions at the port of delivery are unsuitable to the class surveyor for such inspection the Sellers shall make the Vessel available at a suitable alternative place near to delivery port to the satisfaction of the divers and class surveyor. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage. b) In the event that the divers locate damage or defects which affects the Vessels clean condition of class and requires her to be drydocked promptly for repair, or in the event that the class survey finds that the vessel must be drydocked for further examination, then the Sellers shall arrange for the Vessel to be drydocked in accordance with clause 6 of NSF 93 and the Vessel shall proceed to a drydock, in ballast within the delivery range. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage, Owners to be permitted to drydock UK Cont Med in their option and are not obliged to drydock in the USA c) In the event that the Vessel is drydocked under clause 6 b) and c) (which will be reinstated) of NSF 93, then the buyers shall have the right to attend at their own risk and expense and without interference to the Sellers works and to be permitted to paint the Vessel and to carry out other minor works whilst ship is drydocked irrespective of who pays for the drydocking costs. Such painting or any works ordered by the Buyer shall always be for the Buyers costs but shall be coordinated not to interfere with the Sellers works and never to delay Sellers schedule or the delivery of the Vessel. Any Buyers work is subject to the written permission of sellers, which not to be unreasonably withheld. d) In the event that the Sellers works are completed prior to the Buyers completing their painting/other works, then the Sellers shall have the right to tender notice of readiness for delivery whilst the Vessel is in drydock provided that the Vessel is in all other respects ready for delivery or would be but for the Buyers works. In the event that Buyers take delivery of the Vessel in the drydock then the cost of docking and undocking the vessel are to remain for Sellers account and the buyers would be responsible for any drydock dues from the time of the delivery until the vessel is undocked. If Sellers works are completed prior to Buyers works, if any but the Buyers works are completed prior to the expiration of the 3 days Notice of Readiness, then it shall be the Sellers responsibility to shift the Vessel from the drydock to the place of the delivery but only provided this can be completed prior to the expiry of the 3 day period. e) If the divers inspection reveals any breakdown, damage or defect to the rudder, propeller, bottom or other underwater parts of the vessel below the deepest loadline which would impose a Class condition or recommendation, but is deferred by Class until ADDITIONAL CLAUSES TO M/V "SCF SPIRIT" MOA DATED 7TH MAY 2001 the next scheduled dry docking, the purchase price of the Vessel will be reduced by an amount equal to the estimated cost to repair such a breakdown, damage or defect to the satisfaction of Class. The seller and the Buyer will each obtain a cost estimate from a reputable ship repair yard and from a mutually agreed third yard within the delivery range and the average cost of the three yards for the direct cost of repair shall be chosen. f) 1) If such repairs are deferred by Class until after delivery of the vessel under the MOA but prior to the Vessels next scheduled drydocking the buyers will have the option to:- 2) Accept the vessel with such defects together with a reduction of the purchase price predicated on an estimation to be obtained in accordance with the preceding paragraph, provided however that if the Vessel is required to be drydocked the estimate will include the cost of such drydocking; or defer acceptance of the vessel until repairs are completed by the seller to the satisfaction of class. Class shall be the final and sole arbiter of whether underwater damage, if any affects the vessel's class or indeed necessitates prompt drydocking/repair. 3) If the buyers accept delivery of the vessel in drydock, the sellers shall deliver to the buyers at the time of closing evidence that the drydock, shipyard or other similar facility has waived any right to detain, arrest of attach the Vessel for any financial obligation of the sellers to such drydock, shipyard or other similar facility. Clause 18 The class and national and international trading certificates including Solas, IMS, and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. At the time of delivery, the vessel will be in Class without any recommendation or notation affecting class. The vessel will be in such a condition that neither the port state nor flag state authorities at the port where the vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. Clause 19 Buyers are to employ crew and officers including Master, First Mate, and Chief Engineer for a minimum of two years from delivery on such terms and conditions mutually agreed by Buyers and Unicom Cyprus based on separate crew management agreement. Unicom are to have the option to terminate the crew management agreement, ship by ship on giving three months notice for each ship, which may be given not less than 12 months ADDITIONAL CLAUSES TO M/V "SCF SPIRIT" MOA DATED 7TH MAY 2001 from delivery. Clause 20 Vessel is not obliged to deliver free of slops. Clause 21 This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value US$.01 per share not later than 15th June, 2001 Clause 22 SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: (ii) Bill of Sale (four executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by ______________law. 2) Commercial Invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants. 3) Bunkers Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the shareholders certified by the corporate Secretary and authenticated by a Notary Public: (i) approving and ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's offices or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding this sale. 5) Power of Attorney duly authenticated by a Notary Public 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than two (2) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations as to Class. 12) Certificate of Corporate Good Standing of the Seller. ADDITIONAL CLAUSES TO M/V "SCF SPIRIT" MOA DATED 7TH MAY 2001 13) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 14) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the delivery date confirming that the vessel is free of recorded mortgages, liens or other encumbrances. 15) Seller's confirmation that, to the best of their knowledge the Vessel: (i) Has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) Is not blacklisted by the United States of America or any other government, state, country or political sub-division thereof. 16) Protocol of Delivery and Acceptance. 17) If the vessel is not re-registered in Liberia, Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery from the Seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and authenticated by a Notary Public: (i) Approving and ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery and Acceptance, (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorising an Officer or any attorney-in-fact to documents the Vessel under the laws of the Republic of_____________________. 2) Powers of Attorney duly authenticated by a Notary Public. ADDITIONAL CLAUSES TO M/V "SCF SPIRIT" MOA DATED 7TH MAY 2001 3) Instructions to the Seller's bank authorising the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90% purchase price and (ii) bunkers and lubricants, in a manner to be mutually agreed. /s/ Yuri Privalov Yuri Privalov AS AGENTS FIONA MARITIME AGENCIES LTD. /s/ Peter C. Georgiopoulos For the Buyers For the Sellers General Maritime Corporation Scanobo Spirit Shipping Corp., A Marshall Islands Corporation Monrovia EX-10.41 28 a2050304zex-10_41.txt EXHIBIT 10.41 Exhibit 10.41 FIRST ORIGINAL MEMORANDUM OF AGREEMENT - -------------------------------------------------------------------------------- Norwegian Shipbrokers' Association's Memorandum of Agreement for sale and purchase of ships. Adopted by The Baltic and International Maritime Council (BIMCO) in 1956. Code-name SALEFORM 1993 Revised 1966, 1983 and 1986/87. - -------------------------------------------------------------------------------- Dated 7th May 2001 Scanobo Star Shipping Corp., Monrovia hereinafter called the Sellers, have agreed to sell, and General Maritime Corporation, a Marshall Islands Corporation hereinafter called the Buyers, have agreed to buy Name: SCF Star Classification Society/Class: DNV BC HC/E or Tanker for oil ESP PP3 EO Built: 1992 By: Hyundai Heavy Industries, Ulsan, South Korea Flag: Liberian Place of Registration: Monrovia, Liberia Call Sign: EL0C9 Grt/Nrt: 57082/25449 Register Number: 9520 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a telefax and other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 31,210,000 (United States Dollars thirty one million ,two hundred and ten thousand) 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 10 % (ten per cent) of the Purchase Price within 3 (Three) banking days from the date of this Agreement being signed on the fax and all subjects lifted, whichever the later. This deposit shall be placed with Sellers New York Bank and held by them in a joint account for the Sellers and the Buyers, to be released in accordance with joint written instructions of the Sellers and the Buyers. Interest, to be credited to the Buyers. Any fee charged for holding the said deposit shall be borne equally by the Sellers and the Buyers. 3. Payment The said Purchase Price shall be paid in exchange for the delivery documents reasonably required by the buyers in full free of bank charges to Sellers New York Bank on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. The day on which the notice of readiness is given shall not be included for the purpose of counting the number of days in the preceeding sentence. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Norfolk in March 2001 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 15, 7, 5, and 3 days approximate notice of the estimated time of arrival at the intended place of underwater inspection/delivery. When the Vessel is at the place of delivery and in every respect ready for delivery in accordance with this Agreement, including documentation usually required for registration the Sellers shall give the Buyers a written Notice of Readiness for delivery by facsimile and e-mail. b) The Vessel shall be delivered and taken over charter and cargo free safely afloat at one accessible berth at/in one safe port in the United States East Coast / United States Gulf / Uk or Cont/Med not east of Greece range (which port must be suitable for and where a class approved diver and surveyor are located. It is expected that such port will be the next discharge port (or other mutually agreed place) after the Buyers IPO is completed in the Sellers' option. Expected time of delivery: Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 45 Days after the Buyers IPO completed as per clause 21 herein, in Buyers option c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection See Clause 17 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore and on order. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions and publications shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): Unitor Gas Bottles Videotol Library The Buyers shall take over the remaining bunkers and unused lubricating oils in storage tanks and unbroached sealed drums or storage tanks and pay the sellers net purchase price including discounts (excluding barging expenses). Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price. The Sellers shall provide copies of such invoices together with the proposed documents as provided in clause 3 8. Documentation The place of closing: New York In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: See clause 22 At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take Copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery See clause 18 The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 12. Name/markings Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings. 13. Buyers' default Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3. the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives After this Agreement has been signed by both parties and the deposit has been lodged, the Buyers have the right to place two representatives on board the Vessel at their sole risk and expense upon arrival at to be agreed on or about to be agreed These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers' representatives shall sign the Sellers' letter of indemnity prior to their embarkation. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is riot applicable. In the absence of deletions, alternative 16 a) to apply. Clauses 17-22 inclusive attached hereto are to form an integral part of this agreement This document is a computer generated copy of "SALEFORM 1993", printed by authority of the Norwegian Shipbrokers' Association, using software which is the copyright of Strategic Software Ltd. Any insertion or deletion to the form must be clearly visible. In the event or any modification made to the preprinted text of this document, the original document shall apply. The Norwegian Shipbrokers' Association and Strategic Software Ltd. assume no responsibility for any loss or damage caused as a result of discrepancies between the original approved document and this document. ADDITIONAL CLAUSES TO M/V "SCF STAR" MOA DATED 7TH MAY 2001 Clause 17 a) No Drydocking. Prior to delivery and at the port of delivery, the Buyers have the right to arrange at their expense for the relevant class approved diver(s) to inspect the vessels bottom and other underwater parts below the summer load line, using video equipment with a class surveyor and Sellers and Buyers representatives in attendance on board the Vessel. If the conditions at the port of delivery are unsuitable to the class surveyor for such inspection the Sellers shall make the Vessel available at a suitable alternative place near to delivery port to the satisfaction of the divers and class survey. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage. b) In the event that the divers locate damage or defects which affects the Vessels clean condition of class and requires her to be drydocked promptly for repair, or in the event that the class survey finds that the vessel must be drydocked for further examination, then the Sellers shall arrange for the Vessel to be drydocked in accordance with clause 6 of NSF 93 and the Vessel shall proceed to a drydock, in ballast within the delivery range. Cancelling date to be extended by the amount in days of any delay caused thereby and repositioning, including a laden voyage, Owners to be permitted to drydock UK Cont Med in their option and are not obliged to drydock in the USA. c) In the event that the Vessel is drydocked under clause 6 b) and c) (which will be reinstated) of NSF 93, then the buyers shall have the right to attend at their own risk and expense and without interference to the Sellers works and to be permitted to paint the Vessel and to carry out other minor works whilst ship is drydocked irrespective of who pays for the drydocking costs. Such painting or any works ordered by the Buyer shall always be for the Buyers costs but shall be coordinated not to interfere with the Sellers works and never to delay Sellers schedule or the delivery of the Vessel. Any Buyers work is subject to the written permission of sellers, which not to be unreasonably withheld. d) In the event that the Sellers works are completed prior to the Buyers completing their painting/other works, then the Sellers shall have the right to tender notice of readiness for delivery whilst the Vessel is in drydock provided that the Vessel is in all other respects ready for delivery or would be but for the Buyers works. In the event that Buyers take delivery of the Vessel in the drydock then the cost of docking and undocking the vessel are to remain for Sellers account and the buyers would be responsible for any drydock dues from the time of the delivery until the vessel is undocked. If Sellers works are completed prior to Buyers works, if any but the Buyers works are completed prior to the expiration of the 3 days Notice of Readiness, then it shall be the Sellers responsibility to shift the Vessel from the drydock to the place of the delivery but only provided this can be completed prior to the expiry of the 3 day period. e) If the divers inspection reveals any breakdown, damage or defect to the rudder, propeller, bottom or other underwater parts of the vessel below the deepest loadline which would impose a Class condition or recommendation, but is deferred by Class until ADDITIONAL CLAUSES TO M/V "SCF STAR" MOA DATED 7TH MAY 2001 the next scheduled dry docking, the purchase price of the Vessel will be reduced by an amount equal to the estimated cost to repair such a breakdown, damage or defect to the satisfaction of Class. The seller and the Buyer will each obtain a cost estimate from a reputable ship repair yard and from a mutually agreed third yard within the delivery range and the average cost of the three yards for the direct cost of repair shall be chosen. f) 1) If such repairs are deferred by Class until after delivery of the vessel under the MOA but prior to the Vessels next scheduled drydocking the buyers will have the option to:- 2) Accept the vessel with such defects together with a reduction of the purchase price predicated on an estimation to be obtained in accordance with the preceding paragraph, provided however that if the Vessel is required to be drydocked the estimate will include the cost of such drydocking; or defer acceptance of the vessel until repairs are completed by the seller to the satisfaction of class. Class shall be the final and sole arbiter of whether underwater damage, if any affects the vessel's class or indeed necessitates prompt drydocking/repair. 3) If the buyers accept delivery of the vessel in drydock, the sellers shall deliver to the buyers at the time of closing evidence that the drydock, shipyard or other similar facility has waived any right to detain, arrest of attach the Vessel for any financial obligation of the sellers to such drydock, shipyard or other similar facility. Clause 18 The class and national and international trading certificates including Solas, IMS, and IMO are to be clean, valid and unextended for at least 6 months from the date of delivery of the Vessel, and any continuous survey cycles are to be up to date without extensions, recommendations or exceptions by Class at the time of delivery. At the time of delivery, the vessel will be in Class without any recommendation or notation affecting class. The vessel will be in such a condition that neither the port state nor flag state authorities at the port where the vessel shall be delivered to the Buyers shall detain the Vessel from departing by reason of any physical deficiencies. Clause 19 Buyers are to employ crew and officers including Master, First Mate, and Chief Engineer for a minimum of two years from delivery on such terms and conditions mutually agreed by Buyers and Unicom Cyprus based on separate crew management agreement. Unicom are to have the option to terminate the crew management agreement, ship by ship on giving three months notice for each ship, which may be given not less than 12 months ADDITIONAL CLAUSES TO M/V "SCF STAR" MOA DATED 7TH MAY 2001 from delivery. Clause 20 Vessel is not obliged to deliver free of slops. Clause 21 This Memorandum of Agreement is subject to the buyer completing an initial public offering of its Common Stock, par value US$.01 per share not later than 15th June, 2001. Clause 22 SCHEDULE OF CLOSING DOCUMENTS DOCUMENTS TO BE DELIVERED BY THE SELLER: (ii) Bill of Sale (four executed original counterparts) transferring title of the Vessel to the Buyers free from all encumbrances, maritime liens, or any other debts and claims, duly acknowledged and authenticated as required by ______________law. 2) Commercial Invoice describing the Vessel, the date of the MOA and the price, excluding bunkers and lubricants. 3) Bunkers Invoice with copies of supports. 4) Resolutions of each of the Board of Directors and of the shareholders certified by the corporate Secretary and authenticated by a Notary Public: (i) approving and ratifying the execution of the Memorandum of Agreement to sell the Vessel to the Buyer, and (ii) authorizing the Seller's offices or attorneys-in-fact to execute and deliver the (a) Bill of Sale, (b) the Protocol of Delivery and (c) any other delivery documents required under the Memorandum of Agreement or described in this schedule, or otherwise necessary or convenient for the purpose of concluding this sale. 5) Power of Attorney duly authenticated by a Notary Public 6) Copies certified by the corporate Secretary of Articles of Incorporation and By-laws. 7) Certificate from the Vessel's classification society dated not more than two (2) banking days prior to the expected date of delivery, confirming the vessel is in Class without outstanding recommendations, exceptions or notations as to Class. ADDITIONAL CLAUSES TO M/V "SCF STAR" MOA DATED 7TH MAY 2001 12) Certificate of Corporate Good Standing of the Seller. 13) Permission for Sale of Liberian Vessel from the Liberian Deputy Commissioner of Maritime Affairs in New York dated within the statutory validity date. 14) Certificate of Ownership and Encumbrance from the Liberian Deputy Commissioner of Maritime Affairs in New York dated on the delivery date confirming that the vessel is free of recorded mortgages, liens or other encumbrances. 15) Seller's confirmation that, to the best of their knowledge the Vessel: (i) Has not sustained grounding damage to her underwater parts since her most recent drydocking. (ii) Is not blacklisted by the United States of America or any other government, state, country or political sub-division thereof. 16) Protocol of Delivery and Acceptance. 17) If the vessel is not re-registered in Liberia, Letter of undertaking to furnish Deletion Certificate to the Buyers within 30 days after the vessels delivery from the Seller. DOCUMENTS TO BE DELIVERED BY THE BUYER: 1) Resolutions of the Board of Directors certified by the corporate Secretary and authenticated by a Notary Public: (i) Approving and ratifying the execution of the Memorandum of Agreement to purchase the Vessel from the Seller, and (ii) Authorizing an Officer or any attorney-in-fact to accept the Bill of Sale and execute the (a) Protocol of Delivery and Acceptance, (b) instructions to the Seller's bank to pay the ten percent contract deposit to the order of the Seller and (c) any other delivery documents required pursuant to the MOA or described in this schedule or otherwise necessary or convenient to conclude the purchase of the Vessel.; and (iii) Authorising an Officer or any attorney-in-fact to documents the Vessel under the laws of the Republic of_____________________. 2) Powers of Attorney duly authenticated by a Notary Public. ADDITIONAL CLAUSES TO M/V "SCF STAR" MOA DATED 7TH MAY 2001 3) Instructions to the Seller's bank authorising the release of the ten percent deposit to the order of the Seller's and any accrued interest to the order of the Buyer. 4) Payment confirmation of balance of (i) 90% purchase price and (ii) bunkers and lubricants, in a manner to be mutually agreed. /s/ Yuri Privalov Yuri Privalov AS AGENTS FIONA MARITIME AGENCIES LTD. /s/ Peter C. Georgiopoulos For the Buyers For the Sellers General Maritime Corporation Scanobo Star Shipping Corp., A Marshall Islands Corporation Monrovia EX-10.42 29 a2050304zex-10_42.txt EXHIBIT 10.42 Exhibit 10.42 Form of Waiver and Contribution Agreement General Maritime Ship Holdings Ltd. 35 West 56th Street New York, New York 10019 Ladies and Gentlemen: Reference is made to the Registration Statement on Form S-1 (File No. 333-49814) (as supplemented or amended the "Registration Statement") of General Maritime Ship Holdings, Ltd., a Marshall Islands corporation (the "Company"). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the prospectus (the "Prospectus") included in the Registration Statement. In connection with the transactions described in the section of the Prospectus entitled "Recapitalization" (the "Recapitalization"), the undersigned has acquired unregistered shares of Common Stock, par value $.01 per share (the "Restricted Shares"), of the Company in exchange for certain assets (the "Investment"). The undersigned understands that (i) the offer and sale of the Restricted Shares issued pursuant to the Recapitalization were not registered under the Securities Act of 1933, as amended (the "Securities Act"), and (ii) the failure to register such offer and sale could result in the undersigned having certain rights under the federal securities laws, including a right to rescind the Investment. For the benefit of the Company and in consideration of, among other things, the Company's consummation of the Investment, the undersigned (i) hereby waives any and all rights that the undersigned now has or may hereafter have to rescind the Investment on the basis that the offer and sale of the Restricted Shares issued pursuant to the Recapitalization were not registered (the "Waiver") and (ii) agrees that if the Waiver is deemed void or unenforceable for any reason including, without limitation, Section 14 of the Securities Act, then the entire beneficial interest in all property and amounts received by the undersigned in any action to rescind the Investment (regardless of whether such action was initiated by the undersigned) or otherwise received by the undersigned as damages for failure to register the offer and sale of the Restricted Shares under the Securities Act will be promptly paid over and contributed by the undersigned to the Company (or, if the Company so requests, to a subsidiary of the Company), for no additional consideration from the Company, other than the Restricted Shares originally issued pursuant to the Recapitalization. Very truly yours, By: ________________________________ Name: Title: EX-21.1 30 a2050304zex-21_1.txt EXHIBIT 21.1 EXHIBIT 21.1 LIST OF SUBSIDIARIES OF GENERAL MARITIME SHIP HOLDINGS LTD.
JURISDICTION OF NAME OF SUBSIDIARY INCORPORATION/ORGANIZATION Ajax Limited Partnership Cayman Islands Ajax II, L.P. Cayman Islands Alta Ltd. Cayman Islands Boss, L.P. Cayman Islands General Maritime Corporation Marshall Islands General Maritime I Corporation Marshall Islands General Maritime I, L.P. Cayman Islands General Maritime II Corporation Marshall Islands General Maritime II, L.P. Cayman Islands Genmar Agamemnon Ltd. Cayman Islands Genmar Ajax Corporation Marshall Islands Genmar Ajax Ltd. Cayman Islands Genmar Ajax II Corporation Marshall Islands Genmar Alexandra Ltd. Cayman Islands Genmar Boss Corporation Marshall Islands Genmar Boss Ltd. Cayman Islands Genmar Constantine Ltd. Cayman Islands Genmar Gabriel Ltd. Cayman Islands Genmar Harriet Corporation Marshall Islands Genmar Hector Ltd. Cayman Islands Genmar Macedon Ltd. Cayman Islands Genmar Minotaur Ltd. Cayman Islands Genmar Pacific Corporation Marshall Islands Genmar Pericles Ltd. Cayman Islands Genmar Spartiate Ltd. Cayman Islands Genmar Zoe Ltd. Cayman Islands GMC Administration Ltd. Cayman Islands Harriet Ltd. Cayman Islands Harriet, L.P. Cayman Islands Kentucky Shipping Company Ltd. Malta Nord Ltd. Cayman Islands Pacific Tankship, L.P. Pacific Tankship, Ltd. Cayman Islands Stavanger Sun Ltd Cayman Islands United Overseas Tankers, Ltd. Liberia West Virginia Maritime Company Ltd. Malta [Acquired Aframax SPV 1] [Acquired Aframax SPV 2] [Acquired Aframax SPV 3] [Acquired Aframax SPV 4] [Acquired Aframax SPV 5] [Acquired Aframax SPV 6] [Acquired Aframax SPV 7] [Blystad vessel SPV 1] [Blystad vessel SPV 2] [Stavanger Prince SPV]
EX-23.1 31 a2046659zex-23_1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated November 10, 2000, except for the information set forth under "Recapitalization Plan" included in Note 1, as to which the date is , 2001, in the Registration Statement (Amendment No. 2 to Form S-1 No. 333-49814) and related Prospectus of General Maritime Corporation the registration of 7,000,000 shares of its common stock. ERNST & YOUNG LLP New York, New York The foregoing consent is in the form that will be signed upon the completion of the recapitalization and legal entity reorganization described in Note 1 to the consolidated financial statements. /s/ Ernst & Young LLP May 22, 2001 EX-23.2 32 a2046659zex-23_2.txt EXHIBIT 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT The financial statements of General Maritime Corporation (the "Company") included elsewhere in this Registration Statement (No. 333-49814) have been prepared to give effect to the consummation of the recapitalization and legal entity reorganization plan (the "Plan"), the effect of which would result in an increase in the number of issued and authorized shares of the Company. The Plan is expected to take place prior to the commencement of the proposed offering of securities as described more fully in Note 1 under the heading "Recapitalization Plan" to the consolidated financial statements. On the effective date of the Registration Statement covering the common shares to be sold in the public offering, we expect to be able to issue the following consent. /s/ Deloitte & Touche LLP New York, New York May 25, 2001 Board of Directors and Shareholders General Maritime Corporation New York, New York We consent to the use in this Registration Statement of General Maritime Corporation on Form S-1 (No. 333-49814) of our report dated February 27, 2001 except for Note 1, which was completed on , 2001, appearing in the Prospectus, which is part of this Registration Statement, and to the reference to us under the heading "Experts" in such Prospectus. New York, New York , 2001 EX-23.5 33 a2046659zex-23_5.txt EXHIBIT 23.5 EXHIBIT 23.5 May 23, 2001 Ladies and Gentlemen, Reference is made to the prospectus (the "Prospectus") included in Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-49814) filed with the United States Securities and Exchange Commission, relating to the registration of common shares of General Maritime Ship Holdings Ltd. (tbr General Maritime Corporation) (the "Company"). We hereby consent to all references to our name in the Prospectus and to the use of the graphical and statistical information supplied by us set forth in the sections of the Prospectus entitled "Prospectus Summary," "The Industry" and "Business." We further hereby advise the Company that our role has been limited to the provision of those data, graphs and tables. With respect to the statistical data, graphs and tables supplied by us, we advise you that: o some industry data included in this discussion is based on estimates or subjective judgements in circumstances where data for actual market transactions either does not exist or is not publicly available, o the published information of other maritime data collection experts may differ from this data, and o while we have taken reasonable care in the compilation of the industry statistical data, graphs and tables and believe them to be correct, data compilation is subject to limited audit and validation procedures. Sincerely, CLARKSON RESEARCH STUDIES By /s/ C. J. Tyler ----------------------- Name: C. J. Tyler Title: Director -----END PRIVACY-ENHANCED MESSAGE-----