SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: June 18, 1998
MARINE TRANSPORT CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware No.: 001-10583 13-2625280
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(State or other (Commission (I.R.S. employer
jurisdiction of file number) identification number)
incorporation)
1200 Harbor Boulevard, Weehawken, NJ 07087
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 330-0200
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OMI Corp., 90 Park Avenue, New York, NY 10016
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(Former name or former address, if changed since last report)
<PAGE>
Item 1. Changes in Control of Registrant.
On June 18, 1998, Marine Transport Corporation, formerly known as OMI Corp.
(the "Registrant"), completed its acquisition (the "Acquisition") of 100% of the
issued and outstanding shares of common stock of Marine Transport Lines, Inc.
("MTL"), a privately held Delaware corporation. The Registrant acquired the
stock of MTL from selling shareholders of MTL (the "MTL Shareholders") in
exchange for 1,784,554 (after giving effect to the Registrant's previously
announced 1 for 10 reverse stock split) newly issued shares of the Registrant's
common stock, par value $.50 per share (the "Common Stock") pursuant to the
Acquisition Agreement (the "Acquisition Agreement"), dated as of September 15,
1997, by and among the Registrant, Universal Bulk Carriers, Inc., a Liberian
corporation ("UBC"), MTL and the MTL Shareholders, attached as Exhibit 10.1 to
this Form 8-K. Based on the closing price of the Registrant's Common Stock on
the Nasdaq National Market as of June 18, 1998, the aggregate fair market value
of the Registrant's shares issued to MTL Shareholders was $15,370,004. Pursuant
to the Acquisition Agreement, Craig H. Stevenson, Jr., Jack Goldstein, Robert
Bugbee, Constantine G. Caras, Steven D. Jellinek, Livio M. Borghese, Emanuel L.
Rouvelas and Marianne K. Smythe, then current directors of the Registrant, each
resigned his or her directorship, and the following directors, divided into
three classes of three directors per class, were elected by the Registrant's
stockholders:
Name Class and Year Term Expires
- ---- ---------------------------
Stanley B. Rich Class I, 1999
Mark L. Filanowski Class I, 1999
Jonathan Blank Class I, 1999
Paul B. Gridley Class II, 2000
William M. Kearns, Jr. Class II, 2000
Jerome Shelby Class III, 2001
Richard T. du Moulin Class III, 2001
Elaine L. Chao Class III, 2001
Michael Klebanoff remained Class II, 2000
a director of the Registrant
The new directors beneficially own 18.2% of the Common Stock of the
Registrant. Pursuant to the Acquisition, the MTL Shareholders acquired in the
aggregate 31.8% of the outstanding Common Stock of the Registrant.
Item 2. Acquisition or Disposition of Assets.
On June 16, 1998, pursuant to the Acquisition Agreement, the Registrant
acquired 2,223,124 shares of the issued and outstanding common stock of MTL from
the MTL Shareholders in exchange for 56,219 (after giving effect to the
Registrant's previously announced 1 for 10 reverse stock split) newly issued
shares of the Registrant's Common Stock, having an aggregate fair market value
of $5 million. The number of shares of the Registrant's Common Stock issued to
the MTL Shareholders was based on the trading price for the Registrant's Common
Stock and was arrived at based on negotiations between the Registrant and the
MTL Shareholders.
MTL is a diversified ship owner and operator. MTL owns seven ships (in
whole or in part) and manages an additional fifteen ships for other owners. MTL
operates its owned vessels either for (i) its own account through long-term
contracts of affreightment or contracts for the carriage of cargo in the spot
market, or (ii) the account of others through long-term charters to its
customers. MTL also manages ships for other owners, including major industrial
customers (primarily U.S. based) and the U.S. government. MTL's operating fleet
consists of fifteen U.S. flag vessels and seven foreign flag vessels ranging in
size from approximately 4,000 deadweight toms ("dwt") to approximately 191,000
dwt.
Following the vote by the Registrant's stockholders approving and adopting
the Acquisition Agreement, the Registrant consummated several transactions by
which the Registrant's foreign and domestic shipping operations were separated.
On June 17, 1998, the Registrant distributed all of the stock (the
"Distribution") of OMI Corporation, a Marshall Islands corporation (and
successor to UBC) and a wholly owned subsidiary of the Registrant, to its
stockholders through a tax-free distribution pursuant to a Distribution
Agreement, dated as of June 17, 1998, by and between the Registrant and OMI
Corporation, attached as Exhibit 10.3 to this Form 8-K. OMI Corporation holds
the assets and liabilities, and conducts the operations of the Registrant's
foreign business. As a result of the Distribution and related transactions, the
stockholders of the Registrant are now stockholders of two separate, publicly
traded companies: 1) Marine Transport Corporation, an entity engaged in domestic
shipping operations and certain operations of MTL, which is managed by certain
former officers and directors of MTL, and 2) OMI Corporation, an entity engaged
in international shipping operations, which is managed by certain former
officers and directors of the former OMI Corp. The stockholders of the
Registrant became stockholders of OMI Corporation as a result of the
Distribution; no consideration was given for the distribution of shares of stock
in OMI Corporation.
On June 18, 1998, pursuant to the Acquisition Agreement, the Registrant
acquired the remaining outstanding shares of the common stock of MTL from the
MTL Shareholders solely in exchange for 1,728,334 (after giving effect to the
Registrant's previously announced 1 for 10 reverse stock split) newly issued
shares of the Registrant's Common Stock. The consideration paid by the
Registrant for such common stock of MTL is subject to certain adjustments as set
forth in the Acquisition Agreement and under no circumstances will the
Registrant issue an amount of Common Stock to the MTL Shareholders in excess of
44% of the issued and outstanding shares of the Registrant's Common Stock.
<PAGE>
Pursuant to the Acquisition Agreement, the following MTL Shareholders
became directors and/or officers of the Registrant:
Name Position in Registrant
- ---- ----------------------
Richard T. du Moulin Chairman of the Board, President and
Chief Executive Officer
Mark L. Filanowski Senior Vice President, Chief Financial
Officer and Director
Paul B. Gridley Director
Jerome Shelby Director
William M. Kearns, Jr. Director
Stanley B. Rich Director
Peter N. Popov Vice President, Secretary and General Counsel
Jeffrey M. Miller Vice President, Marketing
Item 5. Other Events.
On June 18, 1998, the Registrant filed a Certificate of Amendment of
Restated Certificate of Incorporation (i) reducing the number of shares of stock
which the Registrant was authorized to issue so that the Reverse Stock Split
could be effected and (ii) changing the name of the Registrant from OMI Corp. to
Marine Transport Corporation, which Amendment was approved by the Registrant's
stockholders at the Annual Meeting of the stockholders of Registrant on June 15,
1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a) Financial Statements of Business Acquired.
Set forth below are the financial statements of MTL filed as a part of this
report, all of which are incorporated by reference to the Registrant's
Proxy Statement on Schedule 14A, filed on May 15, 1998 (File No.
000-11573):
(1) Report of Independent Auditors;
(2) Consolidated Balance Sheets as of December 31, 1997 and 1996;
(3) Consolidated Statements of Operations and Accumulated Deficit for
the years ended December 31, 1997, 1996 and 1995;
(4) Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995; and
(5) Notes to Consolidated Financial Statements.
b) Pro Forma Financial Information.
Set forth below is the pro forma financial information filed as a part of
this report, all of which is incorporated by reference to the Registrant's
Proxy Statement on Schedule 14A, filed on May 15, 1998 (File No.
000-11573):
(1) OMI Corp. and Subsidiaries Unaudited Pro Forma Condensed Balance Sheet
as of December 31, 1997; and
(2) OMI Corp. and Subsidiaries Unaudited Pro Forma Condensed Statement of
Operations for the year ended December 31, 1997.
c) Exhibits.
10.1 Acquisition Agreement, dated as of September 15, 1997, by and among
OMI Corp., Universal Bulk Carriers, Inc., Marine Transport Lines, Inc.
and the persons set forth on Exhibit A attached thereto, incorporated
by reference to Exhibit 10.13 to the Form 10-Q Report of the
Registrant for the quarterly period ended September 30, 1997 (File No.
000-11573).
10.2 Amendment No. 1 to Acquisition Agreement, dated as of September 15,
1997, by and among OMI Corp., Universal Bulk Carriers, Inc., Marine
Transport Lines, Inc. and the persons set forth on Exhibit A attached
thereto.
10.3 Distribution Agreement, dated as of June 17, 1998, by and between OMI
Corp. and OMI Corporation, a Marshall Islands corporation.
10.4 Tax Cooperation Agreement, dated as of June 17, 1998, by and between
OMI Corp. and OMI Corporation, a Marshall Islands corporation.
17.1 Letter of resignation from Craig H. Stevenson, Jr.
17.2 Letter of resignation from Jack Goldstein.
17.3 Letter of resignation from Steven D. Jellinek.
17.4 Letter of resignation from Livio M. Borghese.
17.5 Letter of resignation from Emanuel L. Rouvelas.
17.6 Letter of resignation from Constantine G. Caras.
17.7 Letter of resignation from Marianne K. Smythe.
17.8 Letter of resignation from Robert Bugbee.
20.1 Definitive Proxy Statement, incorporated by reference to the
Registrant's Proxy Statement on Schedule 14A, filed on May 15, 1998
(File No. 000-11573).
99.1 Press Release dated June 17, 1998.
99.2 Press Release dated June 17, 1998.
99.3 Press Release dated June 16, 1998.
99.4 Press Release dated June 5, 1998.
<PAGE>
SIGNATURE
Pursuant to requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MARINE TRANSPORT CORPORATION
(formerly known as OMI Corp.)
By: /s/ Mark Filanowski
-------------------
Name: Mark Filanowski
Title: Senior Vice President
Dated: July 6, 1998
<PAGE>
Exhibit Index
10.1 Acquisition Agreement, dated as of September 15, 1997, by and among OMI
Corp., Universal Bulk Carriers, Inc., Marine Transport Lines, Inc. and the
persons set forth on Exhibit A attached thereto, incorporated by reference
to Exhibit 10.13 to the Form 10-Q Report of the Registrant for the
quarterly period ended September 30, 1997 (File No. 000-11573).
10.2 Amendment No. 1 to Acquisition Agreement, dated as of September 15, 1997,
by and among OMI Corp., Universal Bulk Carriers, Inc., Marine Transport
Lines, Inc. and the persons set forth on Exhibit A attached thereto.
10.3 Distribution Agreement, dated as of June 17, 1998, by and between OMI Corp.
and OMI Corporation, a Marshall Islands corporation.
10.4 Tax Cooperation Agreement, dated as of June 17, 1998, by and between OMI
Corp. and OMI Corporation, a Marshall Islands corporation.
17.1 Letter of resignation from Craig H. Stevenson, Jr.
17.2 Letter of resignation from Jack Goldstein.
17.3 Letter of resignation from Steven D. Jellinek.
17.4 Letter of resignation from Livio M. Borghese.
17.5 Letter of resignation from Emanuel L. Rouvelas.
17.6 Letter of resignation from Constantine G. Caras.
17.7 Letter of resignation from Marianne K. Smythe.
17.8 Letter of resignation from Robert Bugbee.
20.1 Definitive Proxy Statement, incorporated by reference to Schedule 14A of
the Registrant, filed on May 15, 1998 (File No. 000-11573).
99.1 Press Release dated June 17, 1998.
99.2 Press Release dated June 17, 1998.
99.3 Press Release dated June 16, 1998.
99.4 Press Release dated June 5, 1998.
AMENDMENT NO. 1 TO ACQUISITION AGREEMENT
AMENDMENT NO. 1, dated as of June 15, 1998, (the "Amendment"), to the
Acquisition Agreement (the "Acquisition Agreement"), dated as of September 15,
1997, by and among OMI Corp., a Delaware corporation ("OMI"), Universal Bulk
Carriers, Inc., a Liberian corporation ("UBC"), Marine Transport Lines, Inc., a
Delaware corporation (the "Company"), and the persons set forth on Exhibit A
attached thereto (each a "Shareholder" and collectively, the "Shareholders").
Capitalized terms used and not otherwise defined herein have the meanings
assigned to them in the Acquisition Agreement.
WHEREAS, OMI, UBC, the Company and the Shareholders desire to amend certain
provisions of the Acquisition Agreement as set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Amendments to Acquisition Agreement
-----------------------------------
The Acquisition Agreement is hereby amended as hereinafter provided in this
Article 1, effective as of June 15, 1998.
1.1 Amendments to Article I of the Acquisition Agreement.
(a) The definition of Domestic Business set forth in Section 1.01
of the Acquisition Agreement is hereby amended by deleting clause
(vii)(a) thereof and adding a new clause (ix) as follows:
"(ix) a promissory Note issued by Argosy Ventures Ltd. to
Challenger Transport Inc. having a face amount of
$9,000,000."
1.2 Amendments to Article VI of the Acquisition Agreement.
(a) ss.6.1 of the Acquisition Agreement is hereby amended by
deleting sub clause (h) in its entirety, and substituting in its place
the following:
"(h) refrain from declaring, setting aside, making or paying
any distribution in redemption of stock or a dividend,
payable in cash, stock, property or otherwise, with respect
to any class of the capital stock of the Company, except (i)
a redemption of stock for cash not in excess of $2,500,000
(less any cash fees paid by the Company to First Stanford and
DNB pursuant to the Consulting Agreement) plus any amounts
distributed pursuant to Section 2.2(c)(iii) in redemption of
Common Stock immediately preceding the Acquisition and (ii) a
redemption of stock for the proceeds from the sale of the
interests of Marine LNG I, Inc. and Marine LNG II, Inc. in
the vessels LNG AQUARIUS and LNG ARIES, respectively, such
proceeds to be used for redemption of Common Stock."
(b) ss.6.19 of the Acquisition Agreement is hereby amended by
deleting clause (i) in its entirety, and substituting in its place the
following:
"(i) $17,155,957 of Common Stock prior to the First Closing
Date; provided, however, prior thereto the Company shall have
certified to the Acquiror that the Company has complied with
the requirements of Section 6.23 of this Agreement; and"
1.3 Amendments to Article VII of the Acquisition Agreement.
(a) ss.7.1(a)(vi) of the Acquisition Agreement is hereby amended
by deleting said condition in its entirety.
(b) ss.7.2(g) of the Acquisition Agreement is hereby amended by
deleting clause (i) in its entirety, and substituting in its place the
following:
"(i) Cadwalader, Wickersham & Taft, special counsel to the
Company and to the Shareholders listed in the first paragraph
of the opinion, shall have furnished the Acquiror with an
opinion, dated the First Closing Date, in form and substance
reasonably satisfactory to the Acquiror."
(c) ss.7.2(g) of the Acquisition Agreement is hereby further
amended by deleting clause (iii) in its entirety.
(d) ss.7.3 of the Acquisition Agreement is hereby amended by
deleting clause (f) in its entirety, and substituting in its place the
following:
"(f) Opinion of Counsel. The Acquiror shall have furnished to
the Shareholders and the Company (i) an opinion, dated the
First Closing Date, of White & Case, special counsel to the
Acquiror and (ii) an opinion, dated the First Closing Date,
of Fredric S. London, Esq., General Counsel of the Acquiror,
each of (i) and (ii) in form and substance reasonably
satisfactory to the Shareholders and the Company."
(e) ss.7.3 of the Acquisition Agreement is hereby further amended
by deleting clause (i) in its entirety, and substituting in its place
the following:
"(i) $17,155,957 in redemption for certain shares of Stock
provided, however, prior thereto the Company shall have
certified to the Acquiror that the Company has complied with
the requirements of Section 6.23 of this Agreement, and"
1.4 Amendments to Exhibits.
(a) Exhibit A to the Acquisition Agreement is hereby amended
by deleting said Exhibit in its entirety, and substituting in
its place Exhibit A hereto.
(b) Exhibit I to the Acquisition Agreement is hereby amended
by deleting said Exhibit in its entirety, and substituting in
its place Exhibit I hereto.
(c) Exhibit V to the Acquisition Agreement is hereby amended
by deleting said Exhibit in its entirety, and substituting in
its place Exhibit V hereto.
(d) Exhibit M to the Acquisition Agreement is hereby amended
by deleting said Exhibit in its entirety.
ARTICLE 2
Certain Additional Covenants and Agreements
-------------------------------------------
2.2 OMI hereby agrees to include among the Domestic Businesses' assets as
of the Second Closing Date two workboats (OMS MAVRICK and OMS TRAVIS) currently
used by OMI Petrolink Corp.
2.3 OMI Corporation hereby agrees to pay on the Second Closing Date by wire
transfer, in immediately available funds, the sum of $1,360,000 to the account
of OMI Corp., which amount shall not be included in the working capital of OMI
Corp. on the Acquiror's Closing Balance Sheet.
2.4 The parties agree that the fair market value of the furniture and
fixtures located at 90 Park Avenue (which is referred to in the Notes to Exhibit
I and the definition of Domestic Businesses) shall be $305,000.
2.5 OMI Corporation shall be responsible for and shall indemnify OMI Corp.
for any and all costs and expenses of OMI Corp. related to (i) the termination
of any one or more of the employees of OMI Corp. currently dedicated to the
business of OMI Ship Management Inc. (the "Ship Management Employees"), (ii) the
employment of the Ship Management Employees by a temporary employee leasing
company in furtherance of OMI's run-off of its current contracts with the U.S.
Maritime Administration (the "OMI MARAD Contracts"), the revenues of which shall
continue to be assets of OMI Corp, (iii) maintaining OMI Ship Management's
office through termination of all of the MARAD contracts, and (iv) the closure
of OMI Ship Management's office and (v) the lease of office space for OMI Ship
Managment.
ARTICLE 3
Certain Waivers
In consideration of the agreements of OMI and OMI Corporation contained in
Section 1.3(a) and Article 2 hereof and subject to consummation of the
transactions to be completed at the First Closing, the Shareholders hereby agree
(i) to waive their rights arising under Section 7.3(a) of the Acquisition
Agreement as a result of the changes referred to in the letter dated June 14,
1998 from Cadwalader, Wickersham & Taft addressed to the Acquiror (to the extent
such changes may be deemed to constitute material adverse changes), which
changes the Company believed (as of the date of such letter) constitute a
material adverse change in the Condition of the Domestic Businesses, and are
limited to the losses resulting from the loss of the Sea River contract, the
losses resulting from the failure of OMI Ship Management to receive any
contracts from the U.S. Maritime Administration, the additional expense incurred
by OMI Ship Management in hiring in personnel to manage the OMI Columbia and the
COURIER, PATRIOT and ROVER, the severence payments, rent and office payments
attributable to OMI Ship Management and the double counting of interest income
related to the cash flow projections of the OMI Columbia and (ii) to waive any
breaches of any representations or warranties as a result of any of the matters
referred to in clause (i).
ARTICLE 4
Certain Additional Covenants and Agreements
4.1 Except as expressly amended hereby, the Acquisition Agreement and all
other agreements, documents, instruments and certificates executed in connection
therewith remain in full force and effect in accordance with their respective
terms.
4.2 This Amendment may be executed in two or more counterparts, all of
which taken together shall constitute one instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be as
effective as delivery of a manually executed counterpart of this Amendment.
4.3 THE INTERPRETATION AND CONSTRUCTION OF THIS AMENDMENT, AND ALL MATTERS
RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS EXECUTED AND TO BE PERFORMED SOLELY WITHIN SUCH STATE
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
4.4 This Amendment shall not constitute a consent or waiver to or
modification of any other provision, term or condition of the Acquisition
Agreement. All terms, provisions, covenants, representations, warranties,
agreements and conditions contained in the Acquisition Agreement, as amended
hereby, remain in full force and effect.
[SIGNATURE PAGES TO FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the Company, the Acquiror and UBC have caused their
corporate names to be hereunto subscribed by their duly authorized respective
officers and each of the Shareholders has signed this Agreement, all as of the
day and year first above written.
MARINE TRANSPORT LINES, INC.
By:/s/ Richard T. du Moulin
------------------------
Name:
Title:
OMI CORP.
By:/s/Vincent de Sostoa
--------------------
Name:
Title:
OMI CORPORATION, as successor-in-
interest to UNIVERSAL BULK
CARRIERS, INC.
By:/s/Vincent de Sostoa
--------------------
Name:
Title:
<PAGE>
SHAREHOLDERS
/s/Richard T. du Moulin /s/Paul B. Gridley
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Richard T. du Moulin Paul B. Gridley
/s/Mark L. Filanowski s/Irwin S. Meyer
- ----------------------- ----------------------------
Mark L. Filanowski Irwin S. Meyer
as registered owner
/s/Jerome Shelby
- ----------------------- ----------------------------
Jerome Shelby
The Wolfson Descendants'
1983 Trust
/s/ Biniamine Amoyelle
----------------------------
By: Biniamine Amoyelle
Title: Trustee
Steamboat Road Holdings, Inc. Larchmont Partners, L.P.
/s/Richard T. du Moulin /s/Richard T. du Moulin
- ------------------------ ----------------------------
By: By:
Title: Title:
Harrowston Corporation /s/ Peter N. Popov
----------------------------
/s/ David E. Sutin Peter N. Popov
- -----------------------
By: David E. Sutin
Title:
/s/Jeffrey Miller /s/ Thomas E. Murphy
- ----------------------- ----------------------------
Jeffrey Miller Thomas E. Murphy
/s/Douglas Newhouse /s/ Stanley Rich
- ----------------------- ----------------------------
Douglas Newhouse Stanley Rich
/s/Nicholas Orfanidis /s/Thomas McIntyre
- ----------------------- ----------------------------
Nicholas Orfanidis Thomas McIntyre
/s/Ken Jones
- ------------------------ Richard T. du Moulin
Ken Jones and Mark Filanowski
as Trustees under the
Trust Agreement dated
September 12, 1997
between the Company and
the Trustees
By:/s/Richard T. du Moulin
-----------------------
Richard T. du Moulin
By:/s/Mark Filanowski
------------------
Mark Filanowski
================================================================================
DISTRIBUTION AGREEMENT
between
OMI CORP.
and
OMI CORPORATION
Dated as of June 15, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I.
DEFINITIONS
SECTION 1.01. General
SECTION 1.02. References
ARTICLE II.
PRE-DISTRIBUTION TRANSACTIONS;
CERTAIN COVENANTS
SECTION 2.01. Corporate Restructuring Transactions
SECTION 2.02. Pre-Distribution Stock Dividends to Domestic Company
SECTION 2.03. Consents
SECTION 2.04. Ancillary Agreements
ARTICLE III.
THE DISTRIBUTION
SECTION 3.01. Domestic Company Action Prior to the Distribution
SECTION 3.02. The Distribution
SECTION 3.03. Fractional Shares
ARTICLE IV.
CONDITIONS TO THE DISTRIBUTION
SECTION 4.01. Conditions Precedent to the Distribution
SECTION 4.02. No Constraint
SECTION 4.03. Deferral of Distribution Date
SECTION 4.04. Public Notice of Deferred Distribution Date
ARTICLE V.
COVENANTS
SECTION 5.01. Further Assurances
SECTION 5.02. OMI Name
SECTION 5.03. Assumption and Satisfaction of Liabilities
SECTION 5.04. No Representations or Warranties; Consents
SECTION 5.05. Removal of Certain Guarantees
SECTION 5.06. Public Announcements
SECTION 5.07. Intercompany Agreements
SECTION 5.08. Tax Matters
SECTION 5.09. OMI Corp. Savings Plan
SECTION 5.10. Debt Adjustment
ARTICLE VI.
ACCESS TO INFORMATION
SECTION 6.01. Provision, Transfer and Delivery of Applicable
Corporate Records
SECTION 6.02. Access to Information
SECTION 6.03. Reimbursement
SECTION 6.04. Confidentiality
SECTION 6.05. Witness Services
SECTION 6.06. Retention of Records
SECTION 6.07. Privileged Matters
ARTICLE VII.
INDEMNIFICATION
SECTION 7.01. Indemnification by Domestic Company
SECTION 7.02. Indemnification by International Company
SECTION 7.03. Limitations on Indemnification Obligations
SECTION 7.04. Procedures for Indemnification
SECTION 7.05. Indemnification Payments
SECTION 7.06. Other Adjustments
SECTION 7.07. Obligations Absolute
SECTION 7.08. Survival of Indemnities
SECTION 7.09. Remedies Cumulative
SECTION 7.10. Cooperation of the Parties With Respect to
Indemnifiable Loss
SECTION 7.11. Contribution
SECTION 7.12. No Indemnities for Tax Liabilities
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.01. Complete Agreement; Construction
SECTION 8.02. Ancillary Agreements
SECTION 8.03. Counterparts
SECTION 8.04. Survival of Agreements
SECTION 8.05. Responsibility for Expenses
SECTION 8.06. Notices
SECTION 8.07. Waivers
SECTION 8.08. Amendments
SECTION 8.09. Successors and Assigns
SECTION 8.10. Termination
SECTION 8.11. Third Party Beneficiaries
SECTION 8.12. Attorney Fees
SECTION 8.13. Title and Headings
SECTION 8.14. Exhibits and Schedules
SECTION 8.15. Specific Performance
SECTION 8.16. Governing Law
SECTION 8.17. Severability
SECTION 8.18. Subsidiaries
SCHEDULES
SCHEDULE 1 Shareholders
SCHEDULE 2 Corporate Restructuring Transactions
SCHEDULE 3 Domestic Company Employees
SCHEDULE 3A OMI Ship Management Employees
SCHEDULE 4 Consents
SCHEDULE 5 Liabilities of International Company that Domestic
Company Guarantees
SCHEDULE 5.08 Approved Actions
SCHEDULE 6 Liabilities of Domestic Company that International
Company Guarantees
SCHEDULE 7 Intercompany Agreements
SCHEDULE 8 Spare Parts
EXHIBITS
EXHIBIT A [Intentionally Left Blank]
EXHIBIT B Domestic Subsidiaries
EXHIBIT C International Business Pro Forma Balance Sheet
EXHIBIT D International Subsidiaries
EXHIBIT E Tax Cooperation Agreement
<PAGE>
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made and entered into as of this 15th day of
June, 1998 by and between OMI Corp., a Delaware corporation ("Domestic
Company"), and OMI Corporation, a Republic of the Marshall Islands company
("International Company").
R E C I T A L S
WHEREAS, the Domestic Company, International Company as the
successor-in-interest to Universal Bulk Carriers, Inc., a Liberian company,
Marine Transport Lines, Inc., a Delaware corporation ("MTL"), and each of the
Persons set forth on Schedule I attached hereto (each a "Shareholder" and
collectively the "Shareholders") have entered into an Acquisition Agreement,
dated as of September 15, 1997 (as amended from time to time, the "Acquisition
Agreement"), providing for the acquisition by Domestic Company of all the
outstanding shares of common stock of MTL (the "Acquisition"), upon the terms
and subject to the conditions set forth in the Acquisition Agreement;
WHEREAS, the Board of Directors of Domestic Company has deemed it
appropriate and advisable, and as contemplated by the Acquisition Agreement, to:
(a) separate and divide the existing businesses of Domestic
Company so that (i) the domestic shipping business shall be owned
directly and indirectly by Domestic Company, and (ii) the foreign
shipping business shall be owned directly and indirectly by
International Company; and
(b) distribute, following such separation and division and
immediately prior to the Second Closing Date, as a dividend to the
holders of shares of common stock, $0.50 par value per share, of
Domestic Company (the "Domestic Common Stock") all of the outstanding
shares of common stock, [$0.50] par value, of International Company
(the "International Common Stock");
WHEREAS, each of Domestic Company and International Company has determined
that it is necessary and desirable to set forth the principal corporate actions
required to effect such separation, division and distributions and to set forth
other agreements that will govern certain other matters prior to and following
such separation, division and distributions.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereto hereby agree as
follows:
<PAGE>
ARTICLE I.
DEFINITIONS
SECTION I.01. General. Unless otherwise defined herein or unless the
context otherwise requires, the following terms will have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined).
"Acquisition Agreement" has the meaning ascribed to such term in the
recitals to this Agreement.
"Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or any arbitration
tribunal.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a second
Person if such first Person possesses, directly or indirectly, the power (i) to
vote 20% or more of the securities having ordinary voting power for the election
of directors or managers of such second Person or (ii) to direct or cause the
direction of the management and policies of such second Person, whether through
the ownership of voting securities, by contract or otherwise.
For purposes of this Agreement, any member of the Domestic Group shall not
be deemed an Affiliate of the International Company and any member of the
International Group shall not be deemed an Affiliate of the Domestic Company.
"Agent" means The Chase Manhattan Bank, or such other trust company or
bank designated by Domestic Company, who shall act as agent for the holders of
Domestic Common Stock in connection with the Distribution.
"Agreement" means this Distribution Agreement by and among Domestic Company
and International Company, including any amendments hereto and each Schedule and
Exhibit attached hereto.
"Ancillary Agreements" means, subject to Section 2.04, all of the written
agreements, instruments, understandings, assignments or other arrangements
(other than this Agreement or the Acquisition Agreement) entered into by the
parties hereto or any other member of their respective Group in connection with
the Corporate Restructuring Transactions, the Distribution and the other
transactions contemplated hereby or thereby, including the Tax Cooperation
Agreement.
"Approved Actions" means the actions set forth on Schedule 5.08.
"Books and Records" means all books, records, manuals, agreements and other
materials (in any form or medium), including, without limitation, all mortgages,
licenses, indentures, contracts, financial data, customer lists, marketing
materials and studies, advertising materials, price lists, correspondence,
distribution lists, supplier lists, production data, sales and promotional
materials and records, purchasing materials and records, personnel records,
manufacturing and quality control records and procedures, blue prints, research
and development files, records, data and laboratory books, accounts records,
sales order files, litigation files, computer files, microfiche, tape recordings
and photographs.
"Business Day" means any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking institutions
are authorized or required by law or other government action to close.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor law.
"Commission" means the United States Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"Consents" has the meaning ascribed to such term in Section 2.03 hereof.
"Corporate Restructuring Transactions" means, collectively, the
transactions set forth in Schedule 2 hereto and such other distributions,
transfers, conveyances, contributions, assignments and other transactions that
are required to be accomplished, effected or consummated by any of Domestic
Company or International Company or any of their respective Subsidiaries and
Affiliates in order to separate and divide, in a series of transactions that, to
the extent intended to qualify for tax-free transactions under the Code, shall
qualify for tax-free treatment under the Code, the existing businesses of
Domestic Company so that:
(i) the Domestic Assets, Domestic Liabilities and Domestic
Business shall be owned, directly and indirectly, by Domestic Company;
(ii) the International Assets, International Liabilities and
International Business shall be owned, directly and indirectly, by
International Company; and
(iii) the Domestic Closing Balance Sheet shall be in all
material respects identical to the Acquiror's Pro Forma Closing
Balance Sheet (as defined in the Acquisition Agreement).
and in regard to any other matters, such changes as the Shareholders'
Representative has consented to in writing in advance, such consent not to be
unreasonably withheld; provided, however, that if any of the proposed changes to
the Corporate Restructuring Transactions would have the effect of (i) changing
the definition or division of Domestic Assets, Domestic Liabilities (or any of
the other definitions referenced therein) or Domestic Business, (ii) changing
the definition or division of International Assets, International Liabilities
(or any of the other definitions referenced therein) or International Business,
(iii) changing the scope or extent of the indemnities provided in Article VII of
this Agreement, or (iv) changing Sections 8.05, 8.11 and/or 8.16 of this
Agreement, no such change shall be made without the prior written consent of the
Shareholders' Representative, such consent not to be unreasonably withheld. No
such change shall be made to the Corporate Restructuring Transactions if such
change would create any liability or obligation on the part of any of the
Shareholders (as such term is defined in the Acquisition Agreement.)
"DGCL" means the Delaware General Corporation Law, as amended.
"Distribution" means the distribution on the Distribution Date as a
dividend to holders of record of shares of Domestic Common Stock as of the
Distribution Record Date, of all of the outstanding International Common Shares
owned by Domestic Company on the basis provided in Section 3.02 hereof.
"Distribution Date" means such date as may hereafter be determined by
Domestic Company's Board of Directors as the date on which the Distribution
shall be effected.
"Distribution Record Date" means the close of business on the date
determined by the Board of Directors of Domestic Company for the purpose of
determining the holders of record of Domestic Common Stock entitled to
participate in the Distribution which date shall be after the Shareholders
acquire shares of Domestic Common Stock on the First Closing Date (as defined in
the Acquisition Agreement).
"Domestic Assets" means, collectively, all of the following rights and
assets that are owned by Domestic Company and/or any of its Subsidiaries as of
the close of business on the Distribution Date:
(i) the capital stock of the Domestic Subsidiaries (including
100% of Petrolink) and the assets of the Domestic Subsidiaries;
(ii) all of the assets (including cash of at least $2,000,000
(or $2,800,000 if MTL elects cash in lieu of having Domestic Company
dry-dock the ROVER pursuant to Section 10.1 of the Acquisition
Agreement as well as cash in an amount equal to the fair market value
of the furniture and fixtures owned by Acquiror and currently located
at 90 Park Avenue, as appraised by an independent third-party
appraiser) included on the Acquiror's Final Closing Balance Sheet (as
defined in the Acquisition Agreement) that are owned by Domestic
Company or any of its Subsidiaries as of the close of business on the
Distribution Date, which shall include:
(1) the charter, option and management contracts in
respect of the OMI COLUMBIA,
(2) the COURIER,
(3) the PATRIOT,
(4) the ROVER,
(5) a capital construction fund containing the
following assets:
(a) approximately $300,000 cash;
(b) 51,000 convertible preferred shares of
Santander Overseas Bank Series D (having a market value on
August 29, 1997 of $25.250 per share);
(c) 31,128 convertible preferred shares of U.S.
West Financing (having a market value on August 29, 1997 of
$25.370 per share); and
(d) 37,000 shares of convertible preferred stock of
Royal Bank of Scotland Series C (having a fair market value
August 29, 1997 of $26.250 per share);
(6) a promissory Note issued by Argosy Ventures
Ltd. to Challenger Transport Inc. having a face amount of
$9,000,000; and
(7) all of the assets and rights under or relating
to Acquiror Multiemployer Plans, the OMI Corp. Separation
Allowance Program, the OMI Corp. 1995 Incentive Equity Plan,
the OMI Corp. 1995 Stock Option Plan for Non-Employee
Directors, the OMI Corp. 1990 Equity Incentive Plan, the OMI
Corp. Non-qualified Stock Option Plan, and the OMI Corp.
Incentive Stock Option Plan, and
(iii) the spare parts listed on Schedule 8.
"Domestic Business" means the businesses that are or were conducted by the
Domestic Company, other than the International Business, and the businesses that
are or were conducted by the Domestic Subsidiaries or any of the other members
of the Domestic Group.
"Domestic Closing Balance Sheet" means the Acquiror's Closing Date Balance
Sheet as defined in the Acquisition Agreement.
"Domestic Common Stock" has the meaning ascribed to such term in the
recitals to this Agreement.
"Domestic Company" has the meaning ascribed to such term in the first
paragraph of this Agreement.
"Domestic Corporate Records" has the meaning ascribed to such term in
Section 6.01(a) hereof.
"Domestic Group" means Domestic Company, the Domestic Subsidiaries and the
corporations, partnerships, joint ventures, investments and other entities that
represent equity investments made by Domestic Company or any of the Domestic
Subsidiaries following consummation of the Corporate Restructuring Transactions
and the Distribution which investments are not prohibited by the terms of the
Acquisition Agreement.
"Domestic Holders" means the holders of record of Domestic Common Stock as
of the Distribution Record Date.
"Domestic Indemnitees" means:
(i) Domestic Company, the Domestic Subsidiaries and each
Affiliate thereof (and their respective permitted successors and
permitted assigns) after giving effect to the Corporate Restructuring
Transactions, the Distribution and the Acquisition; and
(ii) each of the respective past, present and future
directors, officers, employees and agents of any of the entities
described in the immediately preceding clause (i) and each of the
heirs, executors, successors and assigns of such directors, officers,
employees and agents.
"Domestic Liabilities" means, collectively, all of the Liabilities of
Domestic Company and the Domestic Subsidiaries and each of the other members of
the Domestic Group in each case to the extent that such Liabilities (i) directly
or indirectly, arise or arose out of, by reason of, or otherwise in connection
with, the Domestic Assets or the Domestic Business and (ii) remain after giving
effect to the Corporate Restructuring Transactions and the Distribution,
including, without limitation:
(i) all of the Liabilities included on the Acquiror's Final
Closing Balance Sheet;
(ii) Securities Liabilities, without regard to whether such
Securities Liabilities directly or indirectly, arise or arose out of,
by reason of, or otherwise in connection with, the Domestic Business
or Domestic Assets (other than Information Statement Liabilities);
(iii) Liabilities of the Domestic Company arising out of or
relating to any Action or Third Party Claim by a Governmental
Authority or any other Person that is based on, any alleged breach of
a fiduciary duty by the Board of Directors of Domestic Company or any
member thereof or any stockholder derivative suit or other similar
Actions; or
(iv) all Liabilities of OMI Hudson Transport Inc. with
respect to the ownership and operation of the U.S. flag vessels, OMI
HUDSON and OMI DYNACHEM and all Liabilities of OMI Missouri Transport
Inc. with respect to the ownership and operation of the U.S. flag
vessels, OMI MISSOURI and OMI SACRAMENTO;
(v) Liabilities of the International Company, its agents,
officers, directors, Affiliates and any successor thereto arising from
an Approved Action (that is not a Permitted Action) taken by the
Domestic Company or a Domestic Subsidiary that causes (A) the Spin-off
to fail to qualify as a transaction that is tax-free pursuant to
Section 355 and/or Section 368(a) to the extent described in the Ruling
Request or (B) any of the Corporate Restructuring Transactions which is
intended to qualify as a tax-free transaction under Section 332, 351,
355 or 368 to fail to so qualify;
(vi) all Taxes, other than Special Taxes, attributable to the
Domestic Assets or the Domestic Business (excluding, without
limitation, Taxes arising under subpart F of the Code) whether arising
prior to or after the date of the signing of the Acquisition
Agreement; and
(vii) all Liabilities attributable to Acquiror Multiemployer
Plans (as defined in the Acquisition Agreement), Liabilities for
benefits under (but not the administration of) the OMI Corp.
Separation Allowance Program, and Liabilities for the OMI Corp. 1995
Incentive Equity Plan, the OMI Corp. 1995 Stock Option Plan for
Non-Employee Directors, the OMI Corp. 1990 Equity Incentive Plan, the
OMI Corp. Non-qualified Stock Option Plan, and the OMI Corp. Incentive
Stock Option Plan, whether arising prior to or after the date of the
signing of the Acquisition Agreement.
provided, however, that Domestic Liabilities shall expressly exclude any and all
Liabilities of the Domestic Company, the Domestic Subsidiaries and each of the
other members of the Domestic Group for or relating to or arising from:
(i) Information Statement Liabilities;
(ii) the employment of any office management or office
personnel who are or were employed by Domestic Company, the Domestic
Subsidiaries, any member of the Domestic Group, the International
Company, the International Subsidiaries or members of the
International Group at any time after 11:59 pm, December 31, 1996 and
the individuals listed on Schedule 3A hereto, (other than the
individuals listed on Schedule 3 hereto who work for the Domestic
Company, any of the Domestic Subsidiaries, or any of the other members
of the Domestic Group following the Distribution Date and who do not
voluntarily leave such Company within four months after the
Distribution Date), including, without limitation, Liabilities for
severance and Liabilities under the OMI Corp. Separation Allowance
Program or any employment contract to which such individual is a
party, or Liabilities for any bonus (other than the stock related
plans listed in clause (vii) above), pension, retirement or insurance
arrangement, as long as any such Liability does not result from or
relate to any action or omission to act of the Domestic Company, the
Domestic Subsidiaries or any other member of the Domestic Group or any
of their respective directors, officers or employees after the Second
Closing Date which is not expressly required or contemplated by this
Agreement or the Acquisition Agreement;
(iii) any Liability arising out of or relating to the
Klebanoff/Unger Retiree Medical Benefits;
(iv) all Liabilities relating to OMI Corp.'s lease of
premises on Park Avenue (New York City);
(v) the Liabilities of OMI Hudson Transport Inc. with respect
to the ownership and operation of the SHANNON and the Liabilities of
OMI Missouri Transport Inc. with respect to the ownership of the ELBE;
(vi) any guarantees or other similar, undertakings or
obligations in respect of International Assets or the International
Businesses;
(vii) any Liability arising out of or relating to any action
taken or omitted with respect to the administration of the OMI Corp.
Separation Allowance Program; and
(viii) any Liabilities arising after and relating to periods
after June 12, 1998 relating to maintaining OMI Ship Management's
office through termination of all of the MARAD contracts, the lease of
office space for OMI Ship Management and the closure of OMI Ship
Managements's office.
"Domestic Records" has the meaning ascribed to such term in Section 6.01(b)
hereof.
"Domestic Subsidiaries" means the Subsidiaries of Domestic Company set
forth in Exhibit B hereto.
"Environmental Laws" means any and all applicable U.S. federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or other governmental restrictions (including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act and the Oil
Pollution Act of 1990, 42 U.S.C. 9601, et seq.), whether now or hereafter in
existence, relating to the environment, natural resources or human health and
safety or endangered or threatened species of fish, wildlife and plants or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment, including, without limitation, ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, vessel response plans, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes or the cleanup or other remediation thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor Federal statute, and the rules and regulations of the Commission
thereunder.
"Exchange File Material" means the Registration Statement, as amended at
the time it was declared effective under the Exchange Act, the related
Information Statement or any amendment or supplement thereto, the related letter
of transmittal, any related stockholder communication, any other exhibits to any
of the foregoing and any amendment or supplement thereto, in each case including
all information incorporated by reference therein.
"GAAP" means United States generally accepted accounting principles and
practices, as in effect on the date of this Agreement, as promulgated by the
Financial Accounting Standards Board and its predecessors.
"Governmental Authority" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Group" means (i) with respect to Domestic Company, the Domestic Group and
(ii) with respect to International Company, the International Group.
"Indemnifiable Losses" means, with respect to any Person, any and all
losses, liabilities, penalties, claims, fines, damages, amounts paid in
settlement, demands, judgments, assessments, costs and expenses (including,
without limitation, reasonable attorneys' fees, investigation expenses and any
and all other out-of-pocket expenses, but excluding any punitive or
consequential damages to the extent prohibited by law) or other Liabilities
whatsoever that are assessed, imposed, awarded against, incurred or accrued by
such Person.
"Indemnifying Party" has the meaning ascribed to such term in Section 7.03
(a) hereof.
"Indemnitee" has the meaning ascribed to such term in Section 7.03(a)
hereof.
"Information Statement" means the information statement or registration
statement relating to International Business and the transactions contemplated
hereby to be distributed to holders of Domestic Common Stock pursuant to the
terms of this Agreement.
"Information Statement Liabilities" means all Liabilities for violations or
alleged violations that directly or indirectly arise or arose out of, by reason
of, or otherwise was in connection with (A) the Information Statement or (B) the
Proxy Statement; provided, however, Information Statement Liabilities shall not
include such Liabilities to the extent that such Liabilities arise or arose out
of, by reason of, or otherwise was in connection with the information provided
in writing for inclusion in the Proxy Statement by MTL or its shareholders,
officers, directors, employees, agents or representatives.
"Insurance Proceeds" means, with respect to any insured party, those
monies, net of any applicable premium adjustment, retrospectively rated premium,
deductible, retention, or cost of reserve paid or held by or for the benefit of
such insured, which are either:
(i) received by an insured from an insurance carrier; or
(ii) paid by an insurance carrier on behalf of an insured.
"International Assets" means, collectively, all the rights and assets owned
by Domestic Company or any of its Subsidiaries as of the close of business on
the Distribution Date other than the Domestic Assets, including, without
limitation:
(i) the capital stock of the International Subsidiaries and
the assets of the International Subsidiaries;
(ii) all of the assets included on the International Business
Pro Forma Balance Sheet that are owned by Domestic Company or any of
its Subsidiaries as of the close of business on the Distribution Date;
(iii) all of the assets, claims and rights related to the
sale of OMI Environmental Ventures, Inc.; and
(iv) any other asset acquired by Domestic Company or any of
its Subsidiaries from the date of the International Business Pro Forma
Balance Sheet to the close of business on the Distribution Date and
that is of a nature or type that would have resulted in such asset
being included as an asset on the International Business Pro Forma
Balance Sheet had it been acquired on or prior to the date of the
International Business Pro Forma Balance Sheet, determined on a basis
consistent with the determination of the assets included on the
International Business Pro Forma Balance Sheet; and
(v) all of the assets and rights under or relating to the
Acquiror Employee Benefit Plans (as defined in the Acquisition
Agreement) (whether or not any such assets are held in trust, and
including any insurance arrangements or other contracts or agreements,
and any rights or claims thereunder), other than the Acquiror
Multiemployer Plans, the OMI Corp. Separation Allowance Program, the
OMI Corp. 1995 Incentive Equity Plan, the OMI Corp. 1995 Stock Option
Plan for Non-Employee Directors, the OMI Corp. 1990 Equity Incentive
Plan, the OMI Corp. Non-qualified Stock Option Plan, and the OMI Corp.
Incentive Stock Option Plan.
"International Business" means the businesses (other than the Domestic
Business) that are or were conducted by:
(i) the International Company, the International Subsidiaries
or any of the other members of the International Group;
(ii) any other division, Subsidiary or investment of Domestic
Company, or any Domestic Subsidiary, or International Company or any
International Subsidiary, or any of the other members of Domestic
Group or any of the other members of the International Group managed
or operated or in existence as of the date of this Agreement or any
prior time, unless such other division, Subsidiary or investment is
expressly included in the Domestic Business immediately after giving
effect to the Corporate Restructuring Transactions; and
(iii) any business entity acquired or established by or for
Domestic Company, International Company or any of the International
Subsidiaries between the date of this Agreement and the close of
business on the Distribution Date that is engaged in, or intends to
engage in, any business that is of a type or nature that would have
resulted in such business being included either as a Subsidiary or an
asset of International Company on the International Business Pro Forma
Balance Sheet had it been acquired or established on or prior to the
date of the International Business Pro Forma Balance Sheet, determined
on a basis consistent with the determination of the Subsidiaries and
assets included on the International Business Pro Forma Balance Sheet.
"International Business Pro Forma Balance Sheet" means the Pro Forma
Consolidated Balance Sheet for International Company and the International
Subsidiaries (prepared in accordance with GAAP) as of December 31, 1997 attached
hereto as Exhibit C.
"International Common Shares" means the Shares of International Common
Stock owned by Domestic Company after giving effect to the stock dividend
provided for in Section 2.02 hereof.
"International Common Stock" has the meaning ascribed to such term in the
recitals to this Agreement.
"International Company" has the meaning ascribed to such term in the first
paragraph of this Agreement.
"International Group" means International Company, the International
Subsidiaries and the corporations, partnerships, joint ventures, investments and
other entities that represent equity investments made by International Company
or any of the International Subsidiaries following the consummation of the
Corporate Restructuring Transactions and the Distribution.
"International Indemnitees" means:
(i) International Company, the International Subsidiaries and
each Affiliate thereof (and their respective permitted successors and
permitted assigns) after giving effect to the Corporate Restructuring
Transactions, the Distribution and the Acquisition; and
(ii) each of the respective past, present and future directors,
officers, employees and agents of any of the entities described in the
immediately preceding clause (i) and each of the heirs, executors,
successors and assigns of any of such directors, officers, employees
and agents.
"International Liabilities" means, collectively, all of the Liabilities of
Domestic Company, the Domestic Subsidiaries, and each of the other members of
the Domestic Group, International Company, the International Subsidiaries and
each of the other members of the International Group in each case to the extent
that such Liabilities (i) directly or indirectly, arise or arose out of, by
reason of, or otherwise in connection with, the International Assets or the
International Businesses and (ii) remain after giving effect to the Corporate
Restructuring Transactions and the Distribution, including, without limitation:
(i) all of the Liabilities included on the International
Business Pro Forma Balance Sheet;
(ii) Information Statement Liabilities;
(iii) all Liabilities of OMI Hudson Transport Inc. with
respect to the ownership and operation of the SHANNON and all
Liabilities of OMI Missouri Transport Inc. with respect to the
ownership and operation of the ELBE; and all other Liabilities of any
corporation incorporated in the United States to the extent such
Liabilities arise or arise out of, by reason of, or otherwise were in
connection with the ownership or operation of an International Asset
or International Business or any vessel not registered under the U.S.
flag;
(iv) all Taxes attributable to the International Assets or
the International Business (including, without limitation, any Taxes
arising under subpart F of the Code) whether arising prior to or after
the date of the signing of the Acquisition Agreement;
(v) Special Taxes;
(vi) all Liabilities (including with respect to
administration) attributable to Acquiror Employee Benefit Plans (as
defined in the Acquisition Agreement), other than such Liabilities as
constitute Domestic Liabilities;
(vii) All Liability relating to OMI Corp.'s lease of premises
on Park Avenue (New York City);
(viii) Liabilities of the Domestic Company, the Domestic
Subsidiaries and each of the other members of the Domestic Group for
or relating to any guarantees or other similar undertakings or
obligations in respect of International Assets or the International
Businesses;
(ix) the employment of any office management or office
personnel who are or were employed by Domestic Company, the Domestic
Subsidiaries, any member of the Domestic Group, the International
Company, the International Subsidiaries or members of the
International Group at any time after 11:59 pm, December 31, 1996 and
the individuals listed on Schedule 3A hereto, (other than the
individuals listed on Schedule 3 hereto who work for the Domestic
Company, any of the Domestic Subsidiaries, or any of the other members
of the Domestic Group following the Distribution Date and who do not
voluntarily leave such Company within four months after the
Distribution Date and the individuals listed on Schedule 3A hereto),
including, without limitation, Liabilities for severance and
Liabilities under the OMI Corp. Separation Allowance Program or any
employment contract to which such individual is a party, or
Liabilities for any bonus (other than the stock related plans listed
in clause (vii) of the definition of "Domestic Liabilities"), pension,
retirement or insurance arrangement, as long as any such Liability
does not result from or relate to any action or omission to act of the
Domestic Company, the Domestic Subsidiaries or any other member of the
Domestic Group or any of their respective directors, officers or
employees after the Second Closing Date which is not expressly
required or contemplated by this Agreement or the Acquisition
Agreement;
(x) any Liabilities arising after and relating to periods
after June 12, 1998 relating to maintaining OMI Ship Management's
office through termination of all of the MARAD contracts, the lease of
office space for OMI Ship Management and the closure of OMI Ship
Managements's office;
provided, however, the International Liabilities shall expressly exclude all
liabilities of the International Company, International Subsidiaries and each of
the other members of the International Group for or relating to Securities
Liabilities (other than Information Statement Liabilities) and/or Liabilities
arising out of or relating to any action or Third Party Claim by a Governmental
Authority or any other person that is based on, any alleged breach of fiduciary
duty by the Board of Directors of Domestic Company or any member thereof, or any
stockholder derivative suit or other similar Actions.
"International Records" has the meaning ascribed to such term in Section
6.01(b) hereof.
"International Subsidiaries" means the Subsidiaries set forth in Exhibit D
hereto.
"IRS Ruling Letter" has the meaning ascribed to such term in Section
4.01(d).
"Law" means all laws, statutes and ordinances and all regulations, rules
and other pronouncements of Governmental Authorities having the effect of law of
the United States, any foreign country, or any domestic or foreign state,
province, commonwealth, city, country, municipality, territory, protectorate,
possession or similar instrumentality, or any Governmental Authority thereof.
"Liabilities" means, other than Liabilities resulting from Taxes, any and
all debts, liabilities (including, without limitation, liabilities arising out
of the Distribution), obligations, responsibilities, response actions, losses,
damages (whether compensatory, punitive or treble), fines, penalties and
sanctions, absolute or contingent, matured or unmatured, liquidated or
unliquidated, foreseen or unforeseen, joint, several or individual, asserted or
unasserted, accrued or unaccrued, known or unknown, whenever arising, including,
without limitation, those arising under or in connection with any Law (including
any Environmental Law), Action, threatened Action, order or consent decree of
any Governmental Authority or any award of any arbitration tribunal, and those
arising under any contract, guarantee, commitment or undertaking, whether sought
to be imposed by a Governmental Authority, private party, or party to this
Agreement, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute, or otherwise, and including any costs,
expenses, interest, attorneys' fees, disbursements and expense of counsel,
expert and consulting fees and costs related thereto or to the investigation or
defense thereof.
"MTL" shall have the meaning set forth in the recitals to this Agreement.
"NYSE" means the New York Stock Exchange.
"OMI Trademarks and Tradenames" means all trademarks, service marks, and
tradenames containing "OMI" or variations thereof, along with their respective
applications and registrations wherever used or registered, including "OMI
Petrolink".
"Permitted Actions" means (a) any action described in Section 6(a) (ii) or
(iii) of the Tax Cooperation Agreement; (b) the reflagging of one or more of the
following ships: the Courier, the Patriot and the Rover; (c) the issuance and
any redemption, exchange, transfer or other disposition of the Company Class B
stock (if such stock is issued); (d) any redemption or other purchase by MTL of
MTL Common Stock for cash to the extent permitted by the Acquisition Agreement;
and (e) any action required by law, provided that no alternative action could
reasonably avoid such required action.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or other
entity, or any government, or any agency or political subdivision thereof.
"Privilege" has the meaning ascribed to such term in Section 6.07(a)
hereof.
"Privileged Information" has the meaning ascribed to such term in Section
6.07(a) hereof.
"Proxy Statement" has the meaning ascribed to such term in the Acquisition
Agreement.
"Registration Statement" means the Registration Statement filed with the
Commission by the International Company pursuant to the requirements of Section
12 of the Exchange Act and the rules and regulations promulgated thereunder in
order to register the International Common Stock under Section 12(b) of the
Exchange Act.
"Second Closing Date" has the meaning ascribed to such term in the
Acquisition Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder.
"Securities Liabilities" means any and all Liabilities arising out of or
relating in whole or in part to any Action, any Third Party Claim by any
Governmental Authority or any other Person that is based on any violations or
alleged violations of the Securities Act, or Exchange Act, or any other
securities or other similar Law including state "Blue Sky" laws.
"Service" means the United States Internal Revenue Service or any other
Federal agency at the time administering the Code.
"Shareholders' Representative" means a committee comprising Messrs. Shelby,
du Moulin and Sutin.
"Special Taxes" means, other than Taxes resulting from actions taken by
Domestic Company or any of its Subsidiaries without the participation of the
International Company or any of its Subsidiaries that are not Permitted Actions,
(i) all Taxes attributable to the Corporate Restructuring Steps and the
Distribution (including Taxes imposed by reason of '367 or '1248 of the Code),
(ii) all Taxes attributable to the OMI Columbia lease transaction and (iii) all
Taxes resulting from any unqualified withdrawal of assets from the capital
construction fund prior to the Second Closing Date.
"Subsidiary" means, with respect to any Person:
(i) any corporation of which at least a majority in interest
of the outstanding voting stock (having by the terms thereof voting
power under ordinary circumstances to elect a majority of the
directors of such corporation, irrespective of whether or not at the
time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of a
contingency) is at the time, directly or indirectly, owned or
controlled by such Person or by such Person and one or more of its
Subsidiaries; or
(ii) any non-corporate entity in which such Person or such
Person and one or more Subsidiaries of such Person either (a) directly
or indirectly, at the date of determination thereof, has at least
majority ownership interest, or (b) at the date of determination is a
general partner or an entity performing similar functions (e.g.,
manager of a limited liability company or a trustee of a trust).
"Tax" or "Taxes" has the meaning ascribed thereto in the Acquisition
Agreement.
"Tax Cooperation Agreement" means the Tax Cooperation Agreement between
Domestic Company and International Company which agreement shall be entered into
on or prior to the Distribution Date in the form attached hereto as Exhibit E.
"Termination Date" means the date on which this Agreement is terminated
pursuant to and in accordance with the provisions of Section 8.10 of this
Agreement.
"Third Party Claim" has the meaning as defined in Section 7.04(a) hereof.
SECTION I.02. References. References to an "Exhibit" or to a "Schedule"
are, unless otherwise specified, to one of the Exhibits or Schedules attached to
this Agreement, and references to a "Section" are, unless otherwise specified,
to one of the Sections of this Agreement.
ARTICLE II.
PRE-DISTRIBUTION TRANSACTIONS;
CERTAIN COVENANTS
SECTION II.01. Corporate Restructuring Transactions. On or prior to the
Distribution Date (but in all events prior to the Distribution) each of Domestic
Company and International Company shall, and shall cause each of their
respective Subsidiaries to, as applicable, take all action or actions as is
necessary to cause, effect and consummate the Corporate Restructuring
Transactions.
SECTION II.02. Pre-Distribution Stock Dividends to Domestic Company. On or
prior to the Distribution Date (but in all events prior to the Distribution)
International Company shall issue to Domestic Company, as a stock dividend, the
number of shares of International Common Stock as is required to effect the
Distribution, as certified by the Agent. In connection therewith, Domestic
Company shall deliver to International Company for cancellation the share
certificate (or certificates) currently held by it representing all
International Common Stock, and International Company shall issue a new
certificate (or certificates) to Domestic Company representing the total number
of International Common Shares to be owned by Domestic Company after giving
effect to such stock dividend.
SECTION II.03. Consents. The parties hereto shall use their commercially
reasonable best efforts to obtain any third-party/governmental authority
consents or approvals that are required to consummate the Corporate
Restructuring Transactions, the Distribution and the other transactions
contemplated herein (the "Consents") which consents are set forth on Schedule 4.
SECTION II.04. Ancillary Agreements. Prior to the Distribution Date, each
of Domestic Company and International Company and/or such other members of their
respective Groups may enter into (a) the Ancillary Agreements and (b) any other
agreements in respect of the Corporate Restructuring Transactions and the
Distribution as are reasonably necessary or appropriate in connection with the
transactions contemplated hereby and thereby; provided, however, that to the
extent that any such agreement is not attached to the Acquisition Agreement at
the time it is executed or to the extent that any of the proposed changes to any
Ancillary Agreements attached to the Acquisition Agreement would have the effect
of (i) changing the definition or division of Domestic Assets, Domestic
Liabilities (or any of the other definitions referenced therein) or Domestic
Business, (ii) changing the definition or division of International Assets,
International Liabilities (or any of the other definitions referenced therein)
or International Business, (iii) changing the scope or extent of the indemnities
provided in Article VII of this Agreement, or (iv) changing Sections 5.05, 5.10,
8.05, 8.11 and/or 8.16 of this Agreement, no such agreement will be executed and
no such change shall be made without the prior written consent of the
Shareholders' Representative, such consent not to be unreasonably withheld. No
Ancillary Agreement shall be executed or changed if such execution or change
would create any liability or obligation on the part of any of the Shareholders
(as such term is defined in the Acquisition Agreement).
ARTICLE III.
THE DISTRIBUTION
SECTION III.01. Domestic Company Action Prior to the Distribution. Subject
to the terms and conditions set forth herein, Domestic Company shall take, or
cause to be taken, the following acts or actions in connection with, and to
otherwise effect in accordance with the terms of this Agreement, the
Distribution.
(a) Declaration of Distribution and Establishment of
Distribution Date. The Board of Directors of Domestic Company shall,
in its sole discretion and subject to and in accordance with the
applicable rules of the NYSE and provisions of the DGCL, declare the
Distribution and establish the Distribution Record Date, the
Distribution Date, the date on which International Common Shares and
any cash in lieu of fractional shares shall be mailed to the Domestic
Holders and all appropriate procedures in connection with the
Distribution to the extent not provided for herein; provided, however,
that no such action shall create any obligation pursuant to this
Agreement on the part of Domestic Company to effect the Distribution
or in any way limit Domestic Company's power of termination as set
forth in Section 8.10 hereof or alter the consequences of any such
termination from those specified in such Section.
(b) Notice to NYSE. Domestic Company shall, to the extent
possible, give the NYSE not less than ten days advance notice of the
Distribution Record Date in compliance with Rule 10b-17 under the
Exchange Act.
(c) Mailing of Information Statement. Domestic Company shall,
as soon as practicable after the Registration Statement shall have
been declared effective under the Exchange Act, cause the Information
Statement to be mailed to the Domestic Holders.
SECTION III.02. The Distribution.
(a) Duties and Obligations of Domestic Company. Subject to
the conditions contained herein, on the Distribution Date but
effective immediately following the close of business on the
Distribution Date, Domestic Company shall:
(i) deliver to the Agent the share certificates
representing the International Common Shares issued to
Domestic Company by International Company pursuant to
Section 2.02 hereof, endorsed by Domestic Company in blank,
for the benefit of the Domestic Holders; and
(ii) instruct the Agent to distribute, as soon as
practicable following consummation of the Distribution, to
the Domestic Holders one share of International Common Stock
for every one share of Domestic Common Stock.
(b) Duties and Responsibilities of International Company.
International Company shall provide, or cause to be provided, to the
Agent sufficient certificates representing International Common Stock
in such denominations as the Agent may request in order to effect the
Distribution. All shares of International Common Stock issued pursuant
to the Distribution will be validly issued, fully paid and
nonassessable and free of any preemptive (or similar) rights.
SECTION III.03. Fractional Shares.
(a) No Fractional Shares. Notwithstanding anything herein to
the contrary, no certificate or scrip evidencing a fractional share of
International Common Stock shall be issued in connection with the
Distribution, and any such fractional share interests to which a
Domestic Holder would otherwise be entitled will not entitle such
Domestic Holder to vote or to any rights of a stockholder of
International Company. In lieu of any such fractional shares, each
Domestic Holder who, but for the provisions of this Section 3.03,
would be entitled to receive a fractional share interest of
International Common Stock pursuant to the Distribution shall be paid
cash, without any interest thereon, as hereinafter provided.
International Company shall instruct the Agent to determine the number
of whole shares and fractional shares of International Common Stock
allocable to each Domestic Holder, to aggregate all such fractional
shares into whole shares, to sell the whole shares obtained thereby in
the open market at the then prevailing prices on behalf of Domestic
Holders who otherwise would be entitled to receive fractional share
interests and to distribute to each such Domestic Holder his, her or
its ratable share of the total proceeds of such sale, after making
appropriate deductions of the amount required for federal income tax
withholding purposes and after deducting any applicable transfer
taxes. All brokers' fees and commissions incurred in connection with
such sales shall be paid by International Company.
(b) Unclaimed Stock or Cash. Any International Common Stock
or cash in lieu of fractional shares and dividends or distributions
with respect to International Common Stock that remain unclaimed by
any Domestic Holder 180 days after the Distribution Date shall be
returned to International Company and any such Domestic Holders shall
look only to International Company for the International Common Stock,
cash, if any, in lieu of fractional share interests and any such
dividends or distributions to which they are entitled, subject in each
case to applicable escheat or other abandoned property laws.
(c) Beneficial Owners. Solely for purposes of computing
fractional share interests pursuant to Section 3.03(a), the beneficial
owner of shares of Domestic Common Stock held of record in the name of
a nominee will be treated as the holder of record of such shares.
ARTICLE IV.
CONDITIONS TO THE DISTRIBUTION
SECTION IV.01. Conditions Precedent to the Distribution. The obligation of
Domestic Company to cause the Distribution to be consummated shall be subject,
at the option of Domestic Company, to the fulfillment or waiver, on or prior to
the Distribution Date, of each of the following conditions.
(a) Tax Cooperation Agreement. Domestic Company and
International Company shall have executed and delivered the Tax
Cooperation Agreement in the form attached hereto as Exhibit E and
such agreement shall be in full force and effect.
(b) Effective Date of Registration Statement. The
Registration Statement shall have been declared effective by order of
the Commission and no stop order shall have been entered, and no
proceeding for that purpose shall have been initiated or threatened by
the Commission with respect thereto.
(c) NYSE Listing. The International Common Shares shall have
been approved for listing on the NYSE, subject to official notice of
issuance.
(d) Tax Ruling. Domestic Company shall have received rulings
from the Internal Revenue Service (the "IRS Ruling Letter") reasonably
acceptable to Domestic Company, which rulings shall be in full force
and effect as of the Distribution Date, to the effect that the
Distribution as contemplated hereunder will be tax-free for federal
income tax purposes under Sections 355(a) and/or 355(c)(1) and
361(c)(1) of the Code. The IRS Ruling Letter shall be deemed
reasonably acceptable for purposes of this condition notwithstanding
that the Domestic Company, the International Company or any of their
respective Affiliates incurs, as a result of the Distribution or any
of the Corporate Restructuring Transactions, (i) Federal Income Taxes
pursuant to Sections 367 and 1248 (as provided in any Tax regulations
or Tax law enacted, proposed or promulgated as of the date of the
Acquisition Agreement) and (ii) in addition to such Taxes in clause
(i) Federal Income Taxes that do not exceed $500,000.
(e) Pre-Distribution Transactions. Each of the transactions
and other matters contemplated by Article II and Section 3.01 hereof
(including, without limitation, each of the distributions, transfers,
conveyances, contributions, assignments or other transactions included
in, or otherwise necessary to consummate, the Corporate Restructuring
Transactions) shall have been fully effected, consummated and
accomplished.
(f) Covenants. The covenants contained in Article V of this
Agreement that are required to be performed on or before the
Distribution Date shall have been fully performed.
(g) No Prohibitions. Consummation of the transactions
contemplated hereby shall not be prohibited by Law and no Governmental
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which materially
restricts, prevents or prohibits consummation of the Distribution, or
any transaction contemplated by this Agreement, it being understood
that the parties hereto hereby agree to use their commercially
reasonable best efforts to cause any such decree, judgment, injunction
or other order to be vacated or lifted as promptly as possible.
(h) Consents. Domestic Company and International Company and
the other members of their respective Groups shall have obtained all
Consents and such Consents shall be in full force and effect.
(i) HSR Act. The waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, applicable to the
transactions contemplated under the Acquisition Agreement shall have
expired or been terminated.
SECTION IV.02. No Constraint. Notwithstanding the provisions of Section
4.01 above (but subject to Domestic Company's obligations under the Acquisition
Agreement), the fulfillment or waiver of any or all of the conditions precedent
to the Distribution set forth therein shall not:
(i) create any obligation on the part of Domestic Company or
any other party hereto to effect the Distribution;
(ii) in any way limit Domestic Company's right and power
under Section 8.11 hereof to terminate this Agreement and the process
leading to the Distribution and to abandon the Distribution; or
(iii) alter the consequences of any such termination under
Section 8.10 hereof from those specified in such Section.
SECTION IV.03. Deferral of Distribution Date. If the Distribution Date
shall have been established by the Board of Directors of Domestic Company but
all the conditions precedent to the Distribution set forth in this Agreement
have not theretofore been fulfilled or waived, or Domestic Company does not
reasonably anticipate that they will be fulfilled or waived, on or prior to the
date established as the Distribution Date, Domestic Company may, by resolution
of its Board of Directors (or a committee thereof, so authorized), defer the
Distribution Date to a later date.
SECTION IV.04. Public Notice of Deferred Distribution Date. If the Board of
Directors (or a committee thereof, so authorized) of Domestic Company shall
defer the Distribution Date in accordance with Section 4.03 above and public
announcement of the prior Distribution Date has theretofore been made, Domestic
Company shall promptly thereafter issue, in accordance with the advice of legal
counsel, a public announcement with respect to such deferment and shall, with
the advice of legal counsel, take such other actions as may be deemed necessary
or desirable with respect to the dissemination of such information.
ARTICLE V.
COVENANTS
SECTION V.01. Further Assurances. Each of Domestic Company and
International Company shall use all reasonable efforts to:
(a) take or cause to be taken all actions, and to do or cause
to be done all things reasonably necessary, proper or advisable under
applicable Law and agreements or otherwise to consummate and make
effective the transactions contemplated hereby, including, without
limitation, using commercially reasonable efforts to obtain any
consents and approvals from, enter into any amendatory agreements with
and make any applications, registrations or filings with, any third
Person or any Governmental Authority necessary or desirable in order
to consummate the transactions contemplated hereby or to carry out the
purposes of this Agreement; and
(b) execute and deliver such further instruments and
documents and take such other actions as the other party may
reasonably request in order to consummate the transactions
contemplated hereby and effectuate the purposes of this Agreement.
SECTION V.02. OMI Name. Domestic Company shall, and shall cause each of the
other members of its Group over which it has legal or effective direct or
indirect control to, at its own expense:
(a) Within 30 days following the Distribution Date, change
the corporate name of each Domestic ship-owning Subsidiary to delete
therefrom the word "OMI" or any other word that is confusingly similar
to the word "OMI";
(b) Within one year following the Distribution Date, change
the corporate name of OMI Petrolink and OMI Ship Management to delete
therefrom the word "OMI"; and
(c) With respect to Domestic Company, within one year
following the Distribution Date, remove any and all references to the
OMI Trademark and Tradenames from any and all signs, displays or other
identification or advertising material. After the conclusion of such
period, Domestic Company and each other member of its Group over which
it has legal or effective direct or indirect control shall not use or
display any of the OMI Trademarks and Tradenames without the prior
written consent of International Company, which consent may be
withheld for any reason or no reason whatsoever. After the
Distribution Date, no party hereto shall represent or permit to be
represented to any third Person that it or any member of its Group has
a business affiliation with any other party hereto or any member of
such other party's Group, except as expressly permitted by any of the
Ancillary Agreements.
SECTION V.03. Assumption and Satisfaction of Liabilities. From and after
the Distribution Date:
(a) Domestic Company shall, and shall cause each of the other
members of the Domestic Group over which it has legal or effective
direct or indirect control to, assume, pay, perform and discharge all
Domestic Liabilities in accordance with their terms, when
determinable, and otherwise as determined in accordance with the
practice of the parties prior to the Distribution; and
(b) International Company shall, and shall cause each of the
other members of the International Group over which it has legal or
effective direct or indirect control to, assume, pay, perform and
discharge all International Liabilities in accordance with their
terms, when determinable, and otherwise as determined in accordance
with the practice of the parties prior to the Distribution; except for
liabilities for Taxes which will be discharged pursuant to the Tax
Cooperation Agreement.
SECTION V.04. No Representations or Warranties; Consents.
(a) General. Each of the parties hereto understands and
agrees that no party hereto is, in this Agreement making any
representation or warranty whatever, including, without limitation,
any representation or warranty:
(i) as to the value or freedom from encumbrance
of, or any other matter concerning, any assets of such
party; or
(ii) as to the legal sufficiency to convey title
to any asset as of the execution, delivery and filing of
this Agreement or any Ancillary Agreement.
(b) Disclaimer of Merchantability or Fitness of Assets. Each
party hereto further understands and agrees that there are no
warranties, express or implied, as to the merchantability or fitness
of any of the assets either transferred to or retained by the Domestic
Group or the International Group, as the case may be, pursuant to
Corporate Restructuring Transactions and the other terms and
provisions of this Agreement, or any Ancillary Agreement, and all such
assets which are so transferred will be transferred on an "AS IS,
WHERE IS" basis, and the party to which any such assets are
transferred hereunder, or which retains assets hereunder, shall bear
the economic and legal risk that any conveyances of such assets shall
prove to be insufficient or that the title of such party or any other
member of its respective Group to any such assets shall be other than
good and marketable and free from encumbrances.
(c) Acknowledgement of Disclosure and Waiver. International
Company acknowledges, for itself and on behalf of each other member of
its respective Group, that:
(i) Domestic Company and the other members of the
Domestic Group have disclosed, and International Company has
knowledge of, all matters pertaining to the assets and
properties to be conveyed to International Company or any
member of their respective Group pursuant to the Corporate
Restructuring Transactions or otherwise pursuant to the
other terms of this Agreement to the same extent that
Domestic Company and the other members of the Domestic Group
have knowledge of such matters; and
(ii) such knowledge constitutes notice and
disclosure of such matters.
International Company waives, to the fullest extent permitted by law,
for itself and for each other member of its Group, any and all claims
or causes of action which any of them may have arising out of such
matters.
(d) No Representations or Warranties Regarding Consents. Each
of the parties hereto understands and agrees that no party hereto is,
in this Agreement or any Ancillary Agreement or in any other agreement
or document contemplated by this Agreement or any Ancillary Agreement
or otherwise, representing or warranting to the other in any way that
the obtaining of any consents or approvals, the execution and delivery
of any amendatory agreements and the making of any filings or
applications contemplated by this Agreement will satisfy the provisions
of any or all applicable agreements or the requirements of any or all
applicable Laws. Each of the parties hereto further agrees and
understands that the party to which any assets are transferred as
contemplated by the Corporate Restructuring Transactions or the other
provisions of this Agreement shall bear the economic and legal risk
that any necessary consents or approvals are not obtained, that any
necessary amendatory agreements are not executed and delivered or that
any requirements of Laws are not complied with.
(e) Covenant to Use Reasonable Efforts to Obtain Consents.
Notwithstanding the provisions of Section 5.04(d) above, each of the
parties hereto shall (and shall cause each other member of its
respective Group over which it has direct or indirect legal or
effective control to) use commercially reasonable efforts to obtain all
consents and approvals, to enter into all amendatory agreements and to
make all filings and applications which may be reasonably required for
the consummation of the transactions contemplated by this Agreement and
shall take all such further reasonable actions as shall be reasonably
necessary to preserve for each of the Domestic Group and the
International Group, to the greatest extent feasible, the economic and
operational benefits of the allocation of assets and Liabilities
contemplated by this Agreement. In case at any time after the
Distribution Date any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall take all such necessary or
desirable action.
SECTION V.05. Removal of Certain Guarantees.
(a) Removal of Domestic Group as Guarantor of International
Liabilities. Except as otherwise contemplated in the Corporate
Restructuring Transactions or otherwise specified in any Ancillary
Agreement, each of Domestic Company and International Company shall
use its commercially reasonable best efforts to have, on or prior to
the Distribution Date, or as soon as practicable thereafter, Domestic
Company and any other member of the Domestic Group removed as a
guarantor of, or obligor under or for, and released from any Liability
for any obligation of the International Company, International
Subsidiaries or any other member of the International Group for which
the Domestic Company or any other member of the Domestic Group is a
guarantor or obligor, including, without limitation, the liabilities
set forth on Schedule 5. If at or prior to the Distribution Date,
Domestic Company and International Company have not had Domestic
Company and any other member of the Domestic Group removed as a
guarantor of, or obligor under or for, all obligations of the
International Company, International Subsidiaries and any other member
of the International Group for which the Domestic Company or any other
member of the Domestic Group is a guarantor or obligor, International
Company will, at Domestic Company's election, provide an indemnity or
guaranty to Domestic Company with respect to such obligation on
commercially reasonable terms.
(b) Removal of International Group as Guarantor of Domestic
Liabilities. Except as otherwise contemplated in the Corporate
Restructuring Transactions or otherwise specified in any Ancillary
Agreement, each of Domestic Company and International Company shall
use its commercially reasonable best efforts to have, on or prior to
the Distribution Date, or as soon as practicable thereafter,
International Company and any other member of the International Group
removed as a guarantor of, or obligor under or for, any obligation of
the Domestic Company, Domestic Subsidiaries or any other member of the
Domestic Group for which the International Company or any other member
of the International Group is a guarantor or obligor, including,
without limitation, the liabilities set forth on Schedule 6.
SECTION V.06. Public Announcements. Each party hereto shall consult with
the other before issuing any press release or otherwise issuing any other
similar written public statement with respect to this Agreement or the
Distribution and shall not issue any such press release or make any such public
statement without the prior consent of each other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of any other party, issue such press release or other similar written
public statement as may be required by law or any listing agreement with a
national securities exchange to which any party hereto (or any member of such
party's Group) is a party if it has used all reasonable efforts to consult with
such other party and to obtain such party's consent but has been unable to do so
in a timely manner.
SECTION V.07. Intercompany Agreements. Effective as of the consummation of
the Distribution, each of Domestic Company and International Company shall (and
shall cause each other member of its respective Group over which it has legal or
effective direct or indirect control to) terminate each and every agreement
between it and any member of the other Group other than this Agreement and any
of the Ancillary Agreements including, without limitation, the agreements set
forth on Schedule 7; provided, however, that such termination shall not have any
effect whatsoever on any of its rights and/or obligations that accrued or were
incurred prior to the Distribution Date.
SECTION V.08. Tax Matters. Each of Domestic Company and International
Company shall use its reasonable best efforts to cause the Distribution to
qualify as a tax-free distribution under Code Section 355 and/or Section 368(a).
SECTION 5.09. OMI Corp. Savings Plan. International Company agrees to
cooperate and make reasonable best efforts to cause the trust under the OMI
Corp. Savings Plan to transfer, on a date or dates following the Second Closing
Date mutually agreed to between International Company and the sponsor of the
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan (the "MTL
Sponsor"), assets attributable to the account balances under the OMI Corp.
Savings Plan of each participant in such plan who is listed on Schedule 3 to the
trust under the Marine Transport Lines, Inc. Salaried Employees Retirement
Income Plan; provided, however, that such transfer shall take place only upon
International Company's and the MTL Sponsor's reasonable satisfaction that such
transfer would not cause the OMI Corp. Savings Plan or the Marine Transport
Lines, Inc. Salaried Employees Retirement Income Plan to violate any applicable
requirements of the Code and/or the Employee Retirement Income Security Act of
1974, as amended and provided, further, that any assets other than cash may be
transferred only if reasonably acceptable to the MTL Sponsor.
SECTION 5.10. Debt Adjustment. International Company and Domestic Company
will use their commercially reasonable best efforts to cause, prior to the
Distribution Date, International Company to be substituted for Domestic Company,
and Domestic Company to be released from all Liability under the Indenture dated
as of November 1, 1993 between Domestic Company and The Chase Manhattan Bank, as
Trustee (successor to Chemical Bank), as amended (the "Indenture"). If
International Company and Domestic Company have not obtained a complete release
of Domestic Company from its obligations under the Indenture prior to the
Distribution Date, International Company will, at Domestic Company's election,
provide an indemnity or guaranty to Domestic Company with respect to any
remaining obligations of the Domestic Company under the Indenture. If
International Company has assumed by supplemental indenture the repayment
obligation with respect to the outstanding 10 3% Senior Notes due November 1,
2003, and, if necessary, the other obligations contained in the Indenture, as
amended, then, Domestic Company shall deliver a note to International Company in
the amount of $6,443,000 (the "Note"). Assuming the Distribution occurs before
May 1, 1998, the Note will be repayable in 12 payments made semi-annually as
follows: the first payment will be equal to the sum of $175,000 and accrued
interest due on the Notes issued pursuant to the Indentures (the "Senior Notes")
from the Distribution Date to the date of the next payment due on the Senior
Notes. Thereafter, on each payment date (other than the 12th), Domestic Company
will pay International Company $525,000. There will be a balloon payment due of
$4,868,000 on the 12th payment date. The Note will be secured by a first
mortgage on three of OMI Petrolink Corp.'s work boats and any proceeds (net of
costs of the transaction and estimated tax) from the sale thereof. Additionally,
if the Domestic Company completes a debt (excluding bank borrowings) or equity
offering, the proceeds from such offering (net of transaction costs) shall be
used to repay the Note in full along with (i) accrued interest due on the Senior
Notes to the date of prepayment and (ii) an amount equal to $6,827,000 minus the
principal repaid as part of the semi-annual payments on the Note ($175,000). The
definitive documentation relating to the agreements set forth in this Section
5.10 shall be on commercially reasonable terms.
ARTICLE VI.
ACCESS TO INFORMATION
SECTION VI.01. Provision, Transfer and Delivery of Applicable Corporate
Records.
(a) Provision, Transfer and Delivery of International
Records. Domestic Company shall (and shall cause each other member of
its Group over which it has legal or effective direct or indirect
control to) arrange as soon as practicable following the Distribution
Date for the delivery (at International Company's cost) to
International Company of (i) the original Books and Records in its
possession or control that relate primarily to the International
Business or are necessary to operate the International Business
(collectively, the "International Records"), provided Domestic Company
shall be permitted to retain copies of such records, and (ii) copies
of the Books and Records in its possession or control that consist of
the corporate minutes of the Board of Directors (or committees
thereof) of Domestic Company or otherwise relate to the business,
administrative and management operations of Domestic Company as the
parent holding company of the Domestic Business and International
Business (collectively, the "Domestic Corporate Records") except to
the extent such items are already in the possession of any member of
the International Group. The International Records shall be the
property of International Company, and the Domestic Corporate Records
shall be the property of Domestic Company but in each case shall be
available to each of Domestic Company and International Company for
review and duplication, at their cost, pursuant to the terms of this
Agreement.
(b) Provision, Transfer and Delivery of Domestic Records.
International Company shall (and shall cause each other member of its
Group over which it has legal or effective direct or indirect control
to) arrange as soon as practicable following the Distribution Date for
the delivery (at Domestic Company's cost) to Domestic Company of the
Books and Records in its possession that relate primarily to the
Domestic Business or are necessary to operate the Domestic Business
(collectively, the "Domestic Records"), except to the extent such
items are already in the possession of any member of the Domestic
Group. The Domestic Records shall be the property of Domestic Company,
but shall be available to International Company for review and
duplication, at their cost, pursuant to the terms of this Agreement.
SECTION VI.02. Access to Information.
(a) Access to Books and Records. Unless otherwise
contemplated by Section 6.06 hereof, from and after the Distribution
Date, each of Domestic Company and International Company shall (and
shall cause each of the other members of its Group over which it has
legal or effective direct or indirect control to) afford to each other
party and its authorized accountants, counsel and other designated
representatives reasonable access and duplicating rights (all such
duplicating costs to be borne by the requesting party) during normal
business hours, subject to appropriate restrictions for classified,
privileged or confidential information, to the personnel, properties,
Books and Records and other data and information of such party and
each other member of such party's Group relating to operations prior
to the Distribution insofar as such access is reasonably required by
the other requesting party for the conduct of the requesting party's
business (but not for competitive purposes).
(b) Provision of Post-Distribution Commission Filings. For a
period of one year following the Distribution Date, each of Domestic
Company and International Company shall (and shall cause each of the
other members of its Group over which it has legal or effective direct
or indirect control to) provide to the other, promptly following such
time at which such documents are filed with the Commission, all
documents (other than documents or portions thereof for which
confidential treatment has been granted or a request for confidential
treatment is pending) filed by it and by each other member of such
party's Group with the Commission pursuant to the Securities Act or
the periodic and interim reporting requirements of the Exchange Act
and the rules and regulations of the Commission promulgated
thereunder.
SECTION VI.03. Reimbursement; Other Matters. Except to the extent otherwise
contemplated hereby or by any Ancillary Agreement, a party providing Books and
Records or access to information to any other party (or such party's
representatives) under this Article VI shall be entitled to receive from such
other party, upon the presentation of invoices therefor, payments for such
amounts, relating to supplies, disbursements and other out-of-pocket expenses,
as may be reasonably incurred in providing such Books and Records or access to
information.
SECTION VI.04. Confidentiality.
(a) General Restriction on Disclosure. Neither of Domestic
Company or International Company shall (and shall not permit any other
member of its Group over which it has legal or effective direct or
indirect control to) use or permit the use of (without the prior
written consent of the other) and shall hold, and shall cause its
consultants, advisors and other representatives and any other member
of its Group (over which it has legal or effective direct or indirect
control) to hold, in strict confidence, all information concerning
each other party hereto and the other members of such other party's
Group in its possession, custody or control to the extent such
information either
(i) relates to the period up to the Distribution Date,
(ii) relates to any Ancillary Agreement, or
(iii) is obtained in the course of performing services for
the other party pursuant to any Ancillary Agreement,
and each party hereto shall not (and shall cause each other member of
its Group over which it has legal or effective direct or indirect
control not to) otherwise release or disclose such information to any
other Person, except its auditors, attorneys, financial advisors,
bankers and other consultants and advisors, without the prior written
consent of the other affected party or parties, unless compelled to
disclose such information by judicial or administrative process or
unless such disclosure is required by Law and such party has used
commercially reasonable efforts to consult with the other affected
party or parties prior to such disclosure.
(b) Compelled Disclosure. To the extent that a party hereto
is compelled by judicial or administrative process to disclose such
information under circumstances in which any evidentiary privilege
would be available, such party agrees to assert such privilege in good
faith prior to making such disclosure. Each of the parties shall
consult with each relevant other party in connection with any such
judicial or administrative process, including, without limitation, in
determining whether any privilege is available, and shall not object
to each such relevant party and its counsel participating in any
hearing or other proceeding (including, without limitation, any appeal
of an initial order to disclose) in respect of such disclosure and
assertion of privilege.
(c) Exceptions to Confidential Treatment. Anything herein to
the contrary notwithstanding, no party hereto shall be prohibited from
using or permitting the use of, or required to hold in confidence, any
information to the extent that (i) such information has been or is in
the public domain through no fault of such party, (ii) such
information is, after the Distribution Date, lawfully acquired from
other sources by such party, or (iii) this Agreement, any Ancillary
Agreement or any other agreement entered into pursuant hereto permits
the use or disclosure of such information by such party.
SECTION VI.05. Witness Services. At all times from and after the
Distribution Date, each of Domestic Company and International Company shall use
its commercially reasonable best efforts to make available to each other party
hereto, upon reasonable written request, the officers, directors, employees and
agents of each member of its Group for fact finding, consultation or interviews
and as witnesses to the extent that:
(a) such persons may reasonably be required in connection
with the prosecution or defense of any Action in which the requesting
party or any member of its Group may from time to time be involved;
and
(b) there is no conflict in the Action between the requesting
party or any member of its Group and the party to which a request is
made pursuant to this Section 6.05 or any member of such party's
Group. Except as otherwise agreed by the parties, a party providing
witness services to any other party under this Section shall be
entitled to receive from the recipient of such services, upon the
presentation of invoices therefor, payments for such amounts, relating
to supplies, disbursements and other out-of-pocket expenses (but not
salary expenses) and direct and indirect costs of employees who
participate in fact finding, consultation or interviews or are
witnesses, as are actually and reasonably incurred in providing such
fact finding, consulting, interviews or witness services by the party
providing such services.
SECTION VI.06. Retention of Records. Except when a longer period is
required by Law or is specifically provided for herein or in any Ancillary
Agreement, each party hereto shall cause the members of its Group over which it
has legal or effective direct or indirect control, to retain, for a period of at
least seven years following the Distribution Date, all material information
(including, without limitation, all material Books and Records) relating to such
Group and its operations prior to the Distribution Date. Notwithstanding the
foregoing, any party hereto may offer in writing to deliver to the other parties
all or a portion of such information as it relates to members of the offering
party's Group and, if such offer is accepted in writing within 90 days after
receipt thereof, the offering party shall promptly arrange for the delivery of
such information (or copies thereof) to each accepting party (at the expense of
such accepting party). If such offer is not so accepted, the offered information
may be destroyed or otherwise disposed of by the offering party at any time
thereafter in accordance with such party's program of document maintenance and
retention.
SECTION VI.07. Privileged Matters.
(a) Privileged Information. Each of the parties hereto shall,
and shall cause the members of its Group over which it has legal or
effective direct or indirect control to, use its commercially
reasonable best efforts to maintain, preserve, protect and assert all
privileges including, without limitation, all privileges arising under
or relating to the attorney-client relationship (including, without
limitation, the attorney-client and attorney work product privileges)
that relate directly or indirectly to any member of any other Group
for any period prior to the Distribution Date ("Privilege" or
"Privileges"). Each of the parties hereto shall use its reasonable
efforts not to waive, or permit any member of its Group over which it
has legal or effective direct or indirect control to waive, any such
Privilege that could be asserted under applicable Law without the
prior written consent of the other parties. With respect to each
party, the rights and obligations created by this Section 6.07 shall
apply to all information as to which a member of any Group did assert
or, but for the Distribution, would have been entitled to assert the
protection of a Privilege ("Privileged Information") including, but
not limited to, any and all information that either:
(i) was generated or received prior to the
Distribution Date but which, after the Distribution, is in
the possession of a member of another Group; or
(ii) is generated or received after the
Distribution Date but refers to or relates to Privileged
Information that was generated or received prior to the
Distribution Date.
(b) Production of Privileged Information. Upon receipt by a
party or any member of its Group of any subpoena, discovery or other
request that arguably calls for the production or disclosure of
Privileged Information, or if a party or any member of its Group
obtains knowledge that any current or former employee of such party or
any member of its Group has received any subpoena, discovery or other
request which arguably calls for the production or disclosure of
Privileged Information, such party shall promptly notify the other
parties of the existence of the request and shall provide the other
parties a reasonable opportunity to review the information and to
assert any rights it may have under this Section 6.07 or otherwise to
prevent the production or disclosure of Privileged Information. No
party will, or will permit any member of its Group over which it has
direct or indirect legal or effective control to, produce or disclose
any information arguably covered by a Privilege under this Section
6.07 unless:
(i) each other party has provided its express
written consent to such production or disclosure; or
(ii) a court of competent jurisdiction has entered
an order which is not then appealable or a final,
nonappealable order finding that the information is not
entitled to protection under any applicable privilege.
(c) No Waiver. The parties hereto understand and agree that
the transfer of any Books and Records or other information between any
members of the Domestic Group or the International Group shall be made
in reliance on the agreements of Domestic Company and International
Company, as set forth in Section 6.04 and Section 6.07 hereof, to
maintain the confidentiality of Privileged Information and to assert
and maintain all applicable Privileges. The Books and Records being
transferred pursuant to Section 6.01 hereof, the access to information
being granted pursuant to Section 6.02 hereof, the agreement to
provide witnesses and individuals pursuant to Section 6.05 hereof and
the transfer of Privileged Information to either party pursuant to
this Agreement shall not be deemed a waiver of any Privilege that has
been or may be asserted under this Section or otherwise.
ARTICLE VII.
INDEMNIFICATION
SECTION VII.01. Indemnification by Domestic Company. Domestic Company
shall, to the fullest extent permitted by law, indemnify, defend and hold
harmless the International Indemnitees from and against any and all
Indemnifiable Losses of the International Indemnitees, arising out of, by reason
of or otherwise in connection with either (i) the Domestic Liabilities, or (ii)
the breach by Domestic Company of any provision of this Agreement or any
Ancillary Agreement.
SECTION VII.02. Indemnification by International Company. International
Company shall, to the fullest extent permitted by law, indemnify, defend and
hold harmless the Domestic Indemnitees from and against any and all
Indemnifiable Losses of the Domestic Indemnitees arising out of, by reason of or
otherwise in connection with either (i) the International Liabilities
(including, without limitation, Special Taxes), or (ii) the breach by
International Company of any provision of this Agreement or any Ancillary
Agreement.
SECTION VII.03. Limitations on Indemnification Obligations.
(a) Reductions for Insurance Proceeds and Other Recoveries.
The amount that any party (an "Indemnifying Party") is or may be
required to pay to any other Person (an "Indemnitee") pursuant to
Section 7.01 or Section 7.02 above, as applicable, shall be reduced
(retroactively or prospectively) by any Insurance Proceeds or other
amounts actually recovered from third parties by or on behalf of such
Indemnitee in respect of the related Indemnifiable Losses. The
existence of a claim by an Indemnitee for insurance or against a third
party in respect of any Indemnifiable Loss shall not, however, delay
any payment pursuant to the indemnification provisions contained
herein and otherwise determined to be due and owing by an Indemnifying
Party. Rather the Indemnifying Party shall make payment in full of
such amount so determined to be due and owing by it against an
assignment by the Indemnitee to the Indemnifying Party of the entire
claim of the Indemnitee for such insurance or against such third
party. Notwithstanding any other provisions of this Agreement, it is
the intention of the parties hereto that no insurer or any other third
party shall be (i) entitled to a benefit it would not be entitled to
receive in the absence of the foregoing indemnification provisions or
(ii) relieved of the responsibility to pay any claims for which it is
obligated. If an Indemnitee shall have received the payment required
by this Agreement from an Indemnifying Party in respect of any
Indemnifiable Losses and shall subsequently actually receive Insurance
Proceeds or other amounts in respect of such Indemnifiable Losses,
then such Indemnitee shall hold such Insurance Proceeds in trust for
the benefit of such Indemnifying Party and shall pay to such
Indemnifying Party a sum equal to the amount of such Insurance
Proceeds or other amounts actually received, up to the aggregate
amount of any payments received from such Indemnifying Party pursuant
to this Agreement in respect of such Indemnifiable Losses.
(b) Foreign Currency Adjustments. All indemnification
payments hereunder shall be in U.S. Dollars. In the event that any
Indemnifiable Loss shall be denominated in a currency other than U.S.
Dollars, the amount of such payment shall be translated into U.S.
Dollars using the foreign exchange rate for such currency determined
in accordance with the following rules:
(i) with respect to any Indemnifiable Losses
arising from the payment by a financial institution under a
guarantee, comfort letter, letter of credit, foreign
exchange contract or similar instrument, the foreign
exchange rate for such currency shall be determined as of
the date on which such financial institution shall have been
reimbursed;
(ii) with respect to any Indemnifiable Losses
covered by insurance, the foreign exchange rate for such
currency shall be the foreign exchange rate employed by the
insurance company providing such insurance in settling such
Indemnifiable Losses with the Indemnifying Party; and
(iii) with respect to any Indemnifiable Losses not
covered by either clause (i) or (ii) above, the foreign
exchange rate for such currency shall be determined as of
the date that payment with respect to such Indemnifiable
Losses shall be made by the Indemnitee.
SECTION VII.04. Procedures for Indemnification. Except as otherwise
specifically provided in any Ancillary Agreement, including, without limitation,
the Tax Cooperation Agreement:
(a) Notice of Third Party Claims. If a claim or demand is
made against an Indemnitee by any Person who is not a member of the
Domestic Group or International Group (a "Third Party Claim") as to
which such Indemnitee is entitled to indemnification pursuant to this
Agreement, such Indemnitee shall notify the Indemnifying Party in
writing, and in reasonable detail, of the Third Party Claim promptly
(and in any event within 15 Business Days) after receipt by such
Indemnitee of written notice of the Third Party Claim; provided,
however, that failure to give such notification shall not affect the
Indemnitee's right to indemnification hereunder except to the extent
the Indemnifying Party shall have been actually prejudiced as a result
of such failure (except that the Indemnifying Party shall not be
liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice). Thereafter, the Indemnitee
shall deliver to the Indemnifying Party, promptly (and in any event
within 15 Business Days) after the Indemnitee's receipt thereof,
copies of all notices and documents (including court papers) received
by the Indemnitee relating to the Third Party Claim.
(b) Legal Defense of Third Party Claims. If a Third Party
Claim is made against an Indemnitee, the Indemnifying Party shall be
entitled to participate in the defense thereof and, if it so chooses,
to assume the defense thereof with counsel selected by the
Indemnifying Party, which counsel shall be reasonably satisfactory to
the Indemnitee. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnitee for legal or other expenses subsequently
incurred by the Indemnitee in connection with the defense thereof. If
the Indemnifying Party assumes such defense, the Indemnitee shall have
the right to participate in the defense thereof and to employ counsel,
at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party
shall control such defense. The Indemnifying Party shall be liable for
the reasonable fees and expenses of counsel employed by the Indemnitee
for any period during which the Indemnifying Party has failed to
assume the defense of the Third Party Claim (other than during the
period prior to the time the Indemnitee shall have given notice of the
Third Party Claim as provided above). If the Indemnifying Party so
elects to assume the defense of any Third Party Claim, all of the
Indemnitees shall cooperate with the Indemnifying Party in the defense
or prosecution thereof. Notwithstanding the foregoing:
(i) the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be
liable to the Indemnitee for the reasonable fees and
expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if the Third Party Claim seeks as
its primary claim for relief an order, injunction or other
equitable relief or relief for other than money damages
against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its counsel, cannot be
separated from any related claim for money damages;
provided, however, that if such equitable relief or other
relief portion of the Third Party Claim can be so separated
from that for money damages, the Indemnifying Party shall be
entitled to assume the defense of the portion relating to
money damages;
(ii) an Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be
liable to the Indemnitee for the reasonable fees and
expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if, in the Indemnitee's reasonable
judgment, a conflict of interest between such Indemnitee and
such Indemnifying Party exists in respect of such Third
Party Claim; and
(iii) if at any time after assuming the defense of
a Third Party Claim an Indemnifying Party shall fail to
prosecute or withdraw from the defense of such Third Party
Claim, the Indemnitee shall be entitled to resume the
defense thereof and the Indemnifying Party shall be liable
to the Indemnitee for the reasonable fees and expenses of
counsel incurred by the Indemnitee in such defense.
(c) Settlement of Third Party Claims. Except as otherwise
provided below in this Section 7.04(c), or as otherwise specifically
provided in any Ancillary Agreement, including, without limitation,
the Tax Cooperation Agreement, if the Indemnifying Party has assumed
the defense of any Third Party Claim, then
(i) in no event will the Indemnitee admit any
liability with respect to, or settle, compromise or
discharge, any Third Party Claim without the Indemnifying
Party's prior written consent; provided, however, that the
Indemnitee shall have the right to settle, compromise or
discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the
Indemnifying Party from its indemnification obligation
hereunder with respect to such Third Party Claim and such
settlement, compromise or discharge would not otherwise
adversely affect the Indemnifying Party, and
(ii) the Indemnitee will agree to any settlement,
compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms
obligates the Indemnifying Party to pay the full amount of
the liability in connection with such Third Party Claim and
releases the Indemnitee completely in connection with such
Third Party Claim and that would not otherwise adversely
affect the Indemnitee; provided, however, that the
Indemnitee may refuse to agree to any such settlement,
compromise or discharge if the Indemnitee agrees that the
Indemnifying Party's indemnification obligation with respect
to such Third Party Claim shall not exceed the amount that
would be required to be paid by or on behalf of the
Indemnifying Party in connection with such settlement,
compromise or discharge.
If the Indemnifying Party has not assumed the defense of a Third Party
Claim then in no event shall the Indemnitee settle, compromise or
discharge such Third Party Claim without providing prior written notice
to the Indemnifying Party, which shall have the option within 15
Business Days following receipt of such notice to:
(i) approve and agree to pay the settlement,
(ii) approve the amount of the settlement,
reserving the right to contest the Indemnitee's right to
indemnity pursuant to this Agreement,
(iii) disapprove the settlement and assume in
writing all past and future responsibility for such Third
Party Claim (including all of Indemnitee's prior
expenditures in connection therewith), or
(iv) disapprove the settlement and continue to
refrain from participation in the defense of such Third
Party Claim.
In the event the Indemnifying Party does not respond to such written
notice from the Indemnitee within such 15 business-day period, the
Indemnifying Party shall be deemed to have elected option (i).
(d) Other Claims. Any claim on account of an Indemnifiable
Loss which does not result from a Third Party Claim shall be asserted
by written notice given by the Indemnitee to the applicable
Indemnifying Party. Such Indemnifying Party shall have a period of 15
Business Days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 15
business-day period, such Indemnifying Party shall be deemed to have
refused to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 15 business-day period or rejects
such claim in whole or in part, such Indemnitee shall be free to pursue
such remedies as may be available to such party under applicable Law or
under this Agreement.
SECTION VII.05. Indemnification Payments. Indemnification required by this
Article VII shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
SECTION VII.06. Other Adjustments.
(a) Adjustments for Taxes. The amount of any Indemnifiable
Loss shall be (i) increased to take account of any net Tax cost
actually incurred by the Indemnitee arising from any payments received
from the Indemnifying Party (grossed up for such increase); and (ii)
reduced to take account of any net Tax benefit actually realized by the
Indemnitee arising from the incurrence or payment of any such
Indemnifiable Loss. In computing the amount of such Tax cost or tax
benefit, the Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item
arising from the receipt of any payment with respect to an
Indemnifiable Loss or the incurrence or payment of any Indemnifiable
Loss.
(b) Reductions for Subsequent Recoveries or Other Events. In
addition to any adjustments required pursuant to Section 7.03 hereof or
Section 7.06(a) above, if the amount of any Indemnifiable Losses shall,
at any time subsequent to any indemnification payment made by the
Indemnifying Party pursuant to this Article VII, be reduced by
recovery, settlement or otherwise, the amount of such reduction, less
any expenses incurred in connection therewith, shall promptly be repaid
by the Indemnitee to the Indemnifying Party, up to the aggregate amount
of any payments received from such Indemnifying Party pursuant to this
Agreement in respect of such Indemnifiable Losses.
SECTION VII.07. Obligations Absolute. The foregoing contractual obligations
of indemnification set forth in this Article VII shall:
(i) also apply to any and all Third Party Claims that allege
that any Indemnitee is independently, directly, vicariously or jointly
and severally liable to such third party;
(ii) to the extent permitted by applicable law, apply even if
the Indemnitee is negligent or otherwise culpable or at fault, whether
or not such liability arises under any doctrine of strict liability;
and
(iii) be in addition to any liability or obligation that an
Indemnifying Party may have other than pursuant to this Agreement.
SECTION VII.08. Survival of Indemnities. The obligations of Domestic
Company and International Company under this Article VII shall survive
indefinitely the sale or other transfer by any of them of any assets or
businesses or the assignment by any of them of any Liabilities, with respect to
any Indemnifiable Loss of any Indemnitee related to such assets, businesses or
Liabilities.
SECTION VII.09. Remedies Cumulative. The remedies provided in this Article
VII shall be cumulative and shall not preclude assertion by any Indemnitee of
any other rights or the seeking of any and all other remedies against any
Indemnifying Party.
SECTION 7.10. Cooperation of the Parties With Respect to Indemnifiable
Loss.
(a) Identification of Party in Interest. Any party to this
Agreement that has responsibility for an Indemnifiable Loss shall
identify itself as the true party in interest with respect to such
Indemnifiable Loss and shall use its commercially reasonable efforts
to obtain the dismissal of any other party to this Agreement from any
related Indemnifiable Loss.
(b) Disputes Regarding Responsibility for Indemnifiable Loss.
If there is uncertainty or disagreement concerning which party to this
Agreement has responsibility for any Indemnifiable Loss, the following
procedure shall be followed in an effort to reach agreement concerning
responsibility for such Indemnifiable Loss:
(i) The parties in disagreement over the
responsibility for an Indemnifiable Loss shall exchange
brief written statements setting forth their position
concerning which party has responsibility for the
Indemnifiable Loss in accordance with the provisions of this
Article VII. These statements shall be exchanged within 5
days of a party putting another party on written notice that
the other party is or may be responsible for the
Indemnifiable Loss.
(ii) If within 5 days of the exchange of the
written statement of each party's position agreement is not
reached on responsibility for the Indemnifiable Loss, the
General Counsel or other appropriate officer for each of the
parties in disagreement over responsibility for the
Indemnifiable Loss shall speak either by telephone or in
person to attempt to reach agreement on responsibility for
the Indemnifiable Loss.
(c) Effect of Failure to Follow Procedure. Failure to follow
the procedure set forth in clause (b) above shall not affect the
rights and responsibilities of the parties as established by the other
provisions of this Article VII.
(d) Arbitration. The parties agree that, should any dispute,
disagreement or controversy arise between them concerning the
allocation of legal responsibility as between Domestic Company and
International Company for any and all obligations attributable to the
Domestic Business, the Domestic Assets, the International Business or
the International Assets, such dispute, disagreement or controversy
shall be referred to arbitration in the City of New York pursuant to
the laws relating to arbitration there in force, before a panel of
three Arbitrators, consisting of one arbitrator to be appointed by one
party, one by the other party and one arbitrator by the two so chosen.
The decision of any two of the three arbitrators on any dispute or
disputes shall be final. Until such time as the arbitrators finally
close the hearings either party shall have the right by written notice
served on the arbitrators and on an officer of the other party to
specify further disputes or differences for hearing and determination.
The arbitrators may grant any relief which they or a majority of them
deem just and equitable and within the scope of this Agreement,
including, but not limited to, specific performance. Except as
specifically provided herein the arbitration shall be conducted in
accordance with the rules of the American Arbitration Association in
New York. Awards pursuant to this clause may include costs, including
reasonable attorney's fees, and judgment may be entered upon any award
made hereunder in any Court having jurisdiction pursuant to Section
8.16.
(e) Exchange of Information. In connection with the handling
of current or future Actions or Third Party Claims, the parties may
determine that it is in their mutual interest to exchange privileged
or confidential information. If so, the parties agree to discuss
whether it is in their mutual interest to enter into a joint defense
agreement or information exchange agreement to maintain the
confidentiality of their communications and to permit them to maintain
the confidentiality of proprietary information or information that is
otherwise confidential or subject to an applicable privilege,
including but not limited to the attorney-client, work product,
executive, deliberative process, or self-evaluation privileges.
SECTION 7.11. Contribution. To the extent that any indemnification provided
for under Section 7.01 or Section 7.02 is unavailable to an Indemnified Party or
is insufficient in respect of any of the Indemnifiable Losses of such
Indemnified Party then the Indemnifying Party under such Section, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Indemnifiable
Losses (i) in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Party on the one hand and the Indemnified Party on
the other hand from the transaction or other matter which resulted in the
Indemnifiable Losses or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other hand in connection with the action, inaction, statements or
omissions that resulted in such Indemnifiable Losses as well as any other
relevant equitable considerations.
SECTION 7.12. No Indemnities for Tax Liabilities. Except as provided in
Sections 7.01 and 7.02 and the Tax Cooperation Agreement, the parties agree that
neither party shall have an obligation to indemnify the other for Taxes. To the
extent that the provisions of the Tax Cooperation Agreement conflict with the
provisions of this Agreement, the provisions of the Tax Cooperation Agreement
shall apply.
ARTICLE VIII.
MISCELLANEOUS
SECTION VIII.01. Complete Agreement; Construction. This Agreement,
including the Exhibits and Schedules hereto, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.
SECTION VIII.02. Ancillary Agreements. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements.
SECTION VIII.03. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
SECTION VIII.04. Survival of Agreements. Except as otherwise expressly
provided herein, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
SECTION VIII.05. Responsibility for Expenses.
(a) Expenses Incurred on or Prior to Distribution Date.
Except as otherwise set forth in this Agreement or any Ancillary
Agreement, all costs and expenses incurred on or prior to the
Distribution Date (whether or not paid on or prior to the Distribution
Date) in connection with the preparation, execution, delivery and
implementation of this Agreement and any Ancillary Agreement, the
Information Statement and the Distribution, and the consummation of
the transactions contemplated hereby and thereby shall be charged to
and paid by Domestic Company prior to the First Closing Date (as
defined in the Acquisition Agreement); provided, however, that
International Company shall be solely responsible and liable for any
expenses, fees, or other costs that it separately and directly incurs
in connection with any of the transactions contemplated under this
Agreement or any of the Ancillary Agreements. Any such expenses not
paid or accrued prior to the First Closing Date shall be the
responsibility of the International Company.
(b) Expenses Incurred or Accrued After Distribution Date.
Subject to the provisions of Section 8.05(c) below and except as
otherwise set forth in this Agreement or any Ancillary Agreement, each
party shall bear its own costs and expenses first incurred or accrued
after the Distribution Date. Any such expenses not paid or accrued
prior to the Distribution Date shall be the responsibility of the
International Company.
SECTION VIII.06. Notices. All notices and other communications to a party
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to such
party (and will be deemed given on the date on which the notice is received by
such party) at the address for such party set forth below (or at such other
address for the party as the party shall, from time to time, specify by like
notice to the other parties):
If to Domestic Company, at: c/o Marine Transport Corporation
1200 Harbour Boulevard
Weehawken, NJ 07087-0901
Telephone: (201) 330-0200
Telecopier: (201) 330-9645
Attention: Corporate Secretary
If to International Company, at:
OMI Corporation
One Station Place
Stamford, CT 06902
Telephone: (203) 352-6700
Telecopier: (203) 352-6701
Attention: Corporate Secretary
Prior to the Distribution Date a copy of all notices shall be sent in the
manner above provided to Marine Transport Lines Inc., at:
1200 Harbour Boulevard
Weehawken NJ 07087-0901
Attention: Peter N. Popov, Esq.
Fax: 201-330-9645
SECTION VIII.07. Waivers. The failure of any party hereto to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
SECTION VIII.08. Amendments. Subject to the terms of Section 8.10 hereof,
this Agreement may not be modified or amended except by (i) an agreement in
writing signed by the parties hereto and (ii) in the manner provided in the
Acquisition Agreement.
SECTION VIII.09. Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective permitted successors and permitted assigns.
SECTION VIII.10. Termination. This Agreement may be terminated and the
Distribution may be amended, modified or abandoned at any time prior to the
First Closing Date by and in the sole discretion of Domestic Company without the
approval of International Company or the stockholders of Domestic Company. In
the event of such termination, no party shall have any liability of any kind
under this Agreement to any other party or any other person. After the First
Closing Date and before the Second Closing Date, this Agreement may not be
terminated except by an agreement in writing signed by all of the parties hereto
and MTL. After the Second Closing Date, this Agreement may not be terminated
except by an agreement signed by all of the parties hereto; provided, however,
that Article VIII shall not be terminated or amended after the Distribution in
respect of the third party beneficiaries thereto without the consent of such
persons.
SECTION VIII.11. Third Party Beneficiaries. Except as provided in Article
VII hereof (relating to Indemnitees) and this Section 8.11, this Agreement is
solely for the benefit of the parties hereto, the members of their respective
Groups and Affiliates, after giving effect to the Distribution, and should not
be deemed to confer upon third parties (other than MTL and the Shareholders'
Representative pursuant to Sections 2.04, 8.08 and 8.10 and the definition of
Corporate Restructuring Transactions herein) any remedy, claim, liability, right
of reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement. Notwithstanding anything to the contrary in
the immediately preceding sentence, Shareholders (as defined in the Acquisition
Agreement) who held not less than 30% of common stock of MTL of the shares
reflected on Exhibit A to the Acquisition Agreement acting as a group may, at
their own expense, initiate a lawsuit or take other legal action to enforce the
indemnity provision of Section 7.02 hereof; provided that (A) prior thereto such
Shareholders shall have made a written demand on the board of directors of
Domestic Company (with a copy sent to the board of directors of the
International Company) asking that the board take such action and setting forth
the basis of their claim and (B) the board of directors has not taken defined
affirmative steps within a commercially reasonable period of time following
delivery of the written demand, which steps the board in the exercise of its
reasonable business judgement determines are appropriate under the circumstances
and provided, further that any recovery or other award or settlement realized by
the Shareholders shall be solely for the benefit of the Domestic Company and its
stockholders; provided, however, that such Shareholders shall be entitled to
reimbursement from the Domestic Company of reasonable attorney fees and expenses
but in no event in an amount to exceed the amount recovered by the Domestic
Corporation from such award or settlement in such suit. To the extent that the
Shareholders are not satisfied with the actions of the board of directors of the
Domestic Company, following conclusion or cessation of the board of directors'
actions, the Shareholders holding such shares may, at their own expense,
initiate a separate law suit or take other legal action to enforce the indemnity
provision of Section 7.02 hereof; provided that any additional recovery or other
award or settlement realized by the Shareholders shall be solely for the benefit
of the Domestic Company and its stockholders; provided, however, that the
Shareholders shall be entitled to reimbursement from the Domestic Company of
their reasonable attorney fees and expenses but in no event in an amount to
exceed the amount recovered by the Domestic Corporation from such award or
settlement in such suit.
SECTION VIII.12. Attorney Fees. A party in breach of this Agreement shall,
on demand, indemnify and hold harmless the other parties hereto for and against
all out-of-pocket expenses, including, without limitation, reasonable legal
fees, incurred by such other party by reason of the enforcement and protection
of its rights under this Agreement. The payment of such expenses is in addition
to any other relief to which such other party may be entitled hereunder or
otherwise.
SECTION VIII.13. Title and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
SECTION VIII.14. Exhibits and Schedules. The Exhibits and Schedules
attached hereto shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
SECTION VIII.15. Specific Performance. Each of the parties hereto
acknowledges that there is no adequate remedy at law for the failure by such
parties to comply with the provisions of this Agreement and that such failure
would cause immediate harm that would not be adequately compensable in damages.
Accordingly, each of the parties hereto agrees that their agreements contained
herein may be specifically enforced without the requirement of posting a bond or
other security, in addition to all other remedies available to the parties
hereto under this Agreement.
SECTION VIII.16. Governing Law. ALL QUESTIONS AND/OR DISPUTES CONCERNING
THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE
SCHEDULES AND EXHIBITS HERETO SHALL BE GOVERNED BY THE INTERNAL LAWS, AND NOT
THE LAW OF CONFLICTS, OF THE STATE OF NEW YORK. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY (i) AGREES TO BE SUBJECT TO,
AND HEREBY CONSENTS AND SUBMITS TO, THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND OF THE FEDERAL COURTS SITTING IN THE STATE OF NEW YORK, (ii) TO
THE EXTENT SUCH PARTY IS NOT OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE
STATE OF NEW YORK, HEREBY APPOINTS THE CORPORATION TRUST COMPANY, AS SUCH
PARTY'S AGENT IN THE STATE OF NEW YORK FOR ACCEPTANCE OF LEGAL PROCESS AND (iii)
AGREES THAT SERVICE MADE ON ANY SUCH AGENT SET FORTH IN (ii) ABOVE SHALL HAVE
THE SAME LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN
THE STATE OF NEW YORK.
SECTION VIII.17. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION VIII.18. Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantee the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party
which is contemplated to be a Subsidiary of such party on and after the
Distribution Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OMI CORP.
By /s/ Vincent de Sostoa
-----------------------------------
Name:
Title:
OMI CORPORATION
By /s/ Vincent de Sostoa
-----------------------------------
Name:
Title:
<PAGE>
TAX COOPERATION AGREEMENT
between
OMI Corp.
and
OMI Corporation
TAX COOPERATION AGREEMENT
This Agreement is entered into as of this 15th of June ,1998, by and
between OMI Corp., a Delaware corporation ("OMI"), and OMI Corporation, a
Republic of the Marshall Islands company ("International") and a direct,
wholly-owned subsidiary of OMI. OMI and International are sometimes collectively
referred to herein as the "Companies." Capitalized terms used in this Agreement
are defined in Section 1 below. Unless otherwise indicated, all "Section"
references in this Agreement are to sections of this Agreement.
RECITALS
WHEREAS, OMI will acquire all of the outstanding shares of common stock of
Marine Transport Lines ("MTL"), a Delaware corporation, in exchange for OMI
common stock (the "Acquisition"), as contemplated by the Acquisition Agreement
by and among OMI, MTL and the shareholders of MTL, dated as of September 15,
1997 (the "Acquisition Agreement");
WHEREAS, pursuant to the Distribution Agreement between OMI and
International dated as of the 15th of June, 1998 (the "Distribution Agreement"),
OMI will distribute all of the outstanding shares of International to OMI
shareholders in a transaction intended to qualify as tax-free distribution under
Section 355 of the Code (as defined below);
WHEREAS, OMI, MTL and the shareholders of MTL intend the Acquisition to be
a reorganization within the meaning of Section 368(a) of the Code; and
WHEREAS, the Companies desire to provide for and agree upon the
responsibility for the preparation and filing of Tax Returns and other rights
and obligations relating to Taxes with respect to taxable periods before and
after the Distribution;
NOW THEREFORE, in consideration of the mutual agreements contained herein,
the Companies hereby agree as follows:
Section 1. Definition of Terms. For purposes of this Agreement (including
the recitals hereof), the following terms have the following meanings:
"Accounting Firm" shall have the meaning provided in Section 8.
"Acquisition" shall have the meaning set forth in the Recitals.
"Acquisition Agreement" shall have the meaning set forth in the Recitals.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a second Person if
such first Person possesses, directly or indirectly, the power (i) to vote 20%
or more of the securities having ordinary voting power for the election of
directors or managers of such second Person or (ii) to direct or cause the
direction of the management and policies of such second Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, any member of the OMI Group shall not be treated as an Affiliate
of any member of the International Group and any member of the International
Group shall not be treated as an Affiliate of any member of the OMI Group.
"Agreement" shall mean this Tax Cooperation Agreement.
"Approved Actions" shall be the actions set forth on Schedule A hereto.
"Code" means the U.S. Internal Revenue Code of 1986, as amended, or any
successor law.
"Companies" means OMI and International, collectively, and "Company" means
either OMI or International.
"Corporate Restructuring Transactions" shall have the same meaning as in
the Distribution Agreement.
"Dispose" (and, with correlative meaning, "Disposition") shall mean pay,
discharge, settle or otherwise dispose.
"Distribution" means the distribution to OMI shareholders on the
Distribution Date of all of the outstanding stock of International pursuant to
the Distribution Agreement.
"Distribution Agreement" shall have the meaning set forth in the Recitals.
"Distribution Date" means the date of the Distribution.
"Domestic Business" shall have the same meaning as in the Distribution
Agreement.
"Due Date" shall mean, with respect to any Tax Return or payment, the date
on which such Tax Return is due to be filed with or such payment is due to be
made to the appropriate Tax Authority pursuant to applicable law, giving effect
to any applicable extensions of the time for such filing and payment.
"Federal Income Tax" means any Tax imposed by Subtitle A or F of the Code.
"Final Determination" shall mean (1) the entry of a decision of a court of
competent jurisdiction at such time as an appeal may no longer be taken from
such decision or (2) the execution of a closing agreement or its equivalent
between the particular taxpayer and the relevant Tax Authority.
"Foreign Business" shall have the same meaning as "International Business"
in the Distribution Agreement.
"Foreign Income Tax" means any Tax imposed by any foreign country or any
possession of the United States, or by any political subdivision of any foreign
country or United States possession, which is an income tax as defined in
Treasury Regulation Section 1.901-2.
"Group" means the OMI Group, or the International Group, as the context
requires.
"Income Tax" means any Federal Income Tax, State Income Tax, or Foreign
Income Tax.
"International" means OMI Corporation, a Republic of the Marshall Islands
company, and any successor.
"International Group" means International and its Affiliates as determined
immediately after the Distribution.
"IRS" means the Internal Revenue Service
"IRS Ruling Letter" shall have the meaning set forth in Distribution
Agreement.
"OMI" means OMI Corp., a Delaware corporation, and any successor.
"OMI Group" means OMI and its Affiliates as determined immediately after
the Distribution.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or other
entity.
"Post-Distribution Period" means any Tax Period beginning after the
Distribution Date, and, in the case of any Straddle Period, that portion of such
Straddle Period beginning the day immediately following the Distribution Date.
"Pre-Distribution Period" means any Tax Period ending on or before the
Distribution Date and, in the case of any Straddle Period, that portion of such
Straddle Period ending on and including the Distribution Date.
"Prohibited Action" shall have the meaning provided in Section 6.
"Responsible Company" means, with respect to any Tax Return, the Company
having responsibility for preparing and filing such Tax Return under this
Agreement.
"Ruling Request" means the letter filed by OMI with the IRS requesting
rulings from the Internal Revenue Service regarding certain Federal Income Tax
consequences of the Transactions (including all attachments, exhibits, and other
materials submitted with such letter) and any amendment or supplement to such
letter.
"Special Taxes" shall have the same meaning as in the Distribution
Agreement.
"State Income Tax" means any Tax imposed by any State of the United States
or by any political subdivision of any such State which is imposed on or
measured by net income, including state and local income, franchise or similar
Taxes measured by net income.
"Straddle Period" means any Tax Period that begins on or before and ends
after the Distribution Date.
"Tax" or "Taxes" shall have the same meaning as in the Acquisition
Agreement.
"Tax Authority" means, with respect to any Tax, the IRS and any other
state, local or foreign governmental authority responsible for the
administration and/or collection of Taxes.
"Tax Contest" shall mean a notice of deficiency, proposed adjustment,
assessment, audit, examination, suit, dispute or other claim with respect to
Taxes or a Tax Return.
"Tax Item" means, with respect to any Income Tax, any item of income, gain,
loss, deduction, and credit.
"Tax Law" means the law of any governmental entity or political subdivision
thereof relating to any Tax.
"Tax Period" means, with respect to any Tax, the period for which the Tax
is reported as provided under the Code or other applicable Tax Law.
"Tax Records" means Tax Returns, workpapers, documents, records, accounting
data and any other information (including computer data) necessary for (i) the
preparation and filing of all Tax Returns and the determination of all Taxes of
the OMI Group or the International Group, (ii) responding to or defending any
Tax Claim by a Tax Authority relating to such Tax Returns and such Taxes, or
(iii) compliance with the terms of or any record retention agreement with any
Tax Authority.
"Tax Return" means any report, claim for refund, information, return,
schedule, estimate or other similar statement, declaration, filing or document
filed or required by any Tax Authority to be filed with respect to Taxes,
including any attachments, exhibits, schedules or other materials relating to or
submitted with any of the foregoing, any amendments or supplements to any of the
foregoing, and requests for extensions of time to file any item described in
this paragraph.
"Transactions" means the transactions contemplated by the Distribution
Agreement (including the Corporate Restructuring Transactions, as defined in
such agreement) and by the Acquisition Agreement.
"Transfer Taxes" means all stamp, transfer, documentary, sales, use,
registration and other similar Taxes and fees.
Section 2. Preparation and Filing of Tax Returns and Payments with Respect
to Taxes.
2.1. Preparation of Tax Returns Relating to Foreign Income Taxes and Other
Non-U.S. Taxes. International, with the cooperation of OMI and any member of the
OMI Group (as provided for in Section 3 hereof), shall prepare (or cause to be
prepared) all Tax Returns relating to Foreign Income Taxes and all other
non-U.S. Tax Returns with respect to any member of the OMI Group and any member
of the International Group for any Pre-Distribution Period and any Straddle
Period and with respect to any member of the International Group for any
Post-Distribution Period, provided, however, that if a Tax Return described in
this Section 2.1 relates solely to the Domestic Business and OMI (or a member of
the OMI Group) has the sole liability for Taxes reflected on such Tax Return
pursuant to this Agreement and the Distribution Agreement, then OMI shall
prepare (or cause to be prepared) such Tax Return.
2.2. Preparation of Tax Returns Relating to Federal Income Taxes, State
Income Taxes, and Other Non-Foreign Taxes. OMI, with the cooperation of
International and any member of the International Group (as provided for in
Section 3 hereof), shall prepare (or cause to be prepared) all Tax Returns
relating to Federal Income Taxes, State Income Taxes and other U.S. federal,
state or local Taxes with respect to any member of the OMI Group and any member
of the International Group for any Pre-Distribution Period and any Straddle
Period and with respect to any member of the OMI Group for any Post-Distribution
Period, provided, however, that if a Tax Return described in this Section 2.2
relates solely to the Foreign Business and International (or a member of the
International Group) has the sole liability for Taxes reflected on such Tax
Return pursuant to this Agreement and the Distribution Agreement, then
International shall prepare (or cause to be prepared) such Tax Return.
2.3. Filing of Certain Pre-Distribution Period Tax Returns. At least 10
days before the Due Date of any Tax Return which a member of one Group (the
"Preparer") is required to prepare (or cause to be prepared) pursuant to section
2.1 or 2.2 hereof and a member of the other Group (the "Filer") is required to
file, the Preparer shall deliver to the Filer such Tax Return. The Filer shall
timely file (or cause to be filed) any such Tax Return as prepared by the
Preparer with the appropriate Tax Authority.
2.4. Approval of Certain Tax Returns. With respect to any Tax Return
required to be prepared and filed by International or any Affiliate of
International with respect to which OMI may be liable for any Tax shown to be
due thereon pursuant to this Agreement or the Distribution Agreement, at least
20 days prior to the Due Date thereof, International shall deliver such Tax
Return (or cause such Tax Return to be delivered) to OMI for this review,
together with a statement showing in reasonable detail International's
calculation of any Taxes attributable to the Domestic Business (excluding
Special Taxes). International shall file such Tax Return, with OMI's prior
written consent, which shall not be unreasonably withheld or delayed.
With respect to any Tax Return required to be prepared and filed by OMI or
any Affiliate of OMI with respect to which International may be liable for any
Tax shown to be due thereon pursuant to this Agreement or the Distribution
Agreement, at least 20 days prior to the Due Date thereof, OMI shall deliver
such Tax Return (or cause such Tax Return to be delivered) to International for
its review, together with a statement showing in reasonable detail OMI's
calculation of any Taxes attributable to the Foreign Business and any Special
Taxes. OMI shall file such Tax Return, with International's prior written
consent, which shall not be unreasonably withheld or delayed.
2.5. Preparation and Filing of Post-Distribution Period Tax Returns. Except
as set forth in this Section 2, with respect to Post-Distribution Periods,
International shall not have any responsibility for preparing (or causing to be
prepared) and timely filing (or causing to be timely filed) any Tax Return with
respect to any member of the OMI Group, and OMI shall not have any
responsibility for preparing (or causing to be prepared) and timely filing (or
causing to be filed) any Tax Return with respect to any member of the
International Group.
2.6. Modifying Tax Position. Except as otherwise provided in Section 2.7,
with respect to a Tax Return prepared and filed by a member of one Group (the
"Preparer-Filer"), if a member of the other Group (the "Payor") is required to
pay amounts to the Preparer-Filer with respect to such Tax Return, and the Payor
identifies a position that has a reasonable basis and that would reduce the
amount required to be paid by the Payor, the Preparer-Filer shall, upon the
written request of the Payor, adopt such position on such Tax Return if (a) such
position does not increase the amount of Taxes owed by the Preparer-Filer or (b)
the Payor pays to the Preparer-Filer the amount of increased Taxes (including,
without limitation, a gross-up for Taxes on such Taxes and the value of any Tax
Items lost or used) owed by the Preparer-Filer (due to taking such position).
2.7. Reporting of Transaction Tax Items. Each Tax Return described in this
Section 2 shall be consistent with the rulings obtained in the IRS Ruling Letter
and, to the extent not inconsistent with such rulings, with the Acquisition
Agreement and the Distribution Agreement.
2.8. Right to Review Tax Returns. The Responsible Company with respect to
any Tax Return shall make such Tax Return and related workpapers (including
workpapers prepared by external tax preparers such as accountants and attorneys)
available for review by the other Company, if requested, to the extent (i) such
Tax Return relates to Taxes for which the requesting party may be liable, (ii)
such Tax Return relates to Taxes for which the requesting party may be liable in
whole or in part for any additional Taxes owing as a result of adjustments to
the amount of Taxes reported on such Tax Return, or (iii) the requesting party
reasonably determines that it must inspect such Tax Return to confirm compliance
with the terms of this Agreement. The Companies shall attempt in good faith to
resolve any issues arising out of the review of any such Tax Return.
2.9. Payment of Taxes.
(a) (i) For all Taxes with respect to which OMI or any member of the OMI
Group is required to file Tax Returns pursuant to Section 2.2 and 2.3 hereof,
except as otherwise provided below in 2.9(a)(ii), International shall pay OMI
the amount of such Taxes relating to the Foreign Business and any Special Taxes
(including, without limitation, any Federal Income Taxes arising under Subpart F
of the Code) at least 5 business days prior to the Due Date of the Tax Return
reporting such Taxes.
(ii) If International (or a member of the International Group) is required
to make a payment pursuant to Section 2.9(a)(i) hereof in respect of Federal
Income Taxes reported on a consolidated United States federal income Tax Return
that includes OMI and relates to tax year 1997 or a Straddle Period, then the
amount of such payment shall be determined by OMI and shall take into account
Tax Items of the Domestic Business in a manner consistent with the rules of
Treas. Reg. ss. 1.1502-76(b) without regard to any ratable allocations under
Treas. Reg. ss. 1.1502-76(b)(2)(ii) or (iii), provided, however, that for
purposes of this Section 2.9(a)(ii), with respect to a Straddle Period, the
amount of any Tax Items of the Domestic Business that are losses or deductions
shall not exceed the lesser of: (A) the amount of losses or deductions of the
Domestic Business as of the close of the Distribution Date, and (B) the amount
of losses and deductions of the Domestic Business as of the end of the tax year
that includes the Straddle Period.
(b) For all Taxes with respect to which International or any member of the
International Group is required to file Tax Returns pursuant to Sections 2.1 and
2.3 hereof, OMI shall pay International the amount of such Taxes relating to the
Domestic Business (which shall not include any Special Taxes and any Federal
Income Taxes arising under Subpart F of the Code) at least 5 business days prior
to the Due Date of the Tax Return reporting such Taxes.
(c) OMI and International, as the case may be, shall each remit or cause to
be remitted in a timely manner to the appropriate Tax Authority all Taxes due in
respect of any Tax for which it is required to file a Tax Return pursuant to
Section 2 hereof.
Section 3. Assistance and Cooperation.
3.1. General. After the Distribution Date, each of the Companies shall
cooperate (and cause their respective Affiliates to cooperate) with each other
and with each other's agents, including accounting firms and legal counsel, in
connection with matters relating to Taxes of the Companies and their Affiliates
including (i) the preparation and filing of any Tax Returns, (ii) determining
the liability for and amount of any Taxes due (including estimated Taxes) or the
right to and amount of any refund of Taxes, (iii) examinations of Tax Returns,
and (iv) any administrative or judicial proceeding in respect of Taxes assessed
or proposed to be assessed. Such information and documents shall include,
without limitation, records, returns, schedules, documents, work papers or other
relevant materials. Each of the Companies shall also make available to each
other, as reasonably requested and on a mutually convenient basis, (A) the Tax
Records described in Section 3.3 and 3.4, and (B) personnel (including officers,
directors, employees and agents of the Companies or their respective Affiliates)
to provide such assistance as might be reasonably required. Any information or
documents provided under this Section 3 shall be kept confidential by the
Company receiving the information or documents, except as may otherwise be
necessary in connection with the filing of Tax Returns or in connection with any
communications with a Tax Authority or any administrative or judicial
proceedings relating to Taxes or any Tax Return. Specifically, International
shall also make available to OMI, as reasonably requested and available,
personnel (including officers, directors, employees and agents of the Companies
or their respective Affiliates) who have knowledge of the Tax matters of OMI and
are therefore able to assist in the preparing, maintaining, and interpreting of
information and documents relevant to OMI's Taxes for the taxable year ending
December 31, 1997.
3.2. Tax Information Package. International shall prepare (or cause to be
prepared) a Tax information package which includes all relevant materials,
information, data, work papers and similar documents and records with respect to
Taxes relating to any Pre-Distribution Period for which OMI has the obligation
to prepare a Tax Return pursuant to Section 2.2 hereof. International shall
deliver such Tax information package to OMI no later than 90 days after the
Distribution Date.
3.3. Retention of Tax Records. International shall preserve and keep all
Tax Records until the later of (i) the expiration of any applicable statutes of
limitation (giving effect to any applicable extensions or waivers), and (ii)
seven years after the Distribution Date. If, prior to the expiration of the
applicable statute of limitation and such seven-year period, International
wishes to dispose of any Tax Records, International may dispose of such records
upon 180 days prior notice to OMI. Such notice shall include a detailed list of
the Tax Records to be disposed of. OMI or any of its Affiliates shall have the
opportunity, at its cost and expense, to copy or remove, within such 180-day
period, all or any part of such Tax Records.
3.4. Access to Tax Records. The Companies and their respective Affiliates
shall make available to each other for inspection and copying during normal
business hours upon reasonable notice all Tax Records in their possession to the
extent reasonably required by the other Company in connection with the
preparation, review or audit of Tax Returns, Tax litigation and claims, and the
resolution of items under this Agreement.
Section 4. Liability for Taxes.
4.1. General. (a) Except as expressly set forth in this Agreement, the
Distribution Agreement shall govern the indemnification obligations with respect
to Taxes between the OMI Group and the International Group.
(b) To the extent that a party (the "Indemnifying Party") is required to
make an indemnification payment to another party (the "Indemnitee") pursuant to
Section 7.01 or 7.02 of the Distribution Agreement or Section 2.9 or 4.3 hereof,
the Indemnifying Party shall pay the Indemnitee no later than 5 business days
prior to the Due Date of the relevant Tax Return or 5 business days after the
Indemnifying Party receives the Indemnitee's calculations of the Indemnifying
Party's indemnification obligation hereunder, whichever occurs last, the amount
of such indemnification obligation.
(c) All indemnification payments made pursuant to this Agreement and the
Distribution Agreement shall be treated as occurring immediately before the
Distribution, and no member of the OMI Group and the International Group and
none of the subsidiaries (as defined in Section 3.14 of the Acquisition
Agreement) of any such member shall take any position inconsistent with such
treatment before any Tax Authority, except to the extent that a Final
Determination with respect to the recipient party causes any such payment to not
be so treated.
(d) Except as otherwise expressly provided in Section 2.9(a)(ii), all
indemnification payments relating to the liability for Taxes of the OMI Group
and the International Group under this Agreement and the Distribution Agreement
shall be determined on a pre-Tax basis, i.e., without regard to the Tax
consequences to the indemnified party of making a payment that is indemnified by
another party under this Agreement or of receiving a payment under this
Agreement as indemnification therefor.
4.2. Tax Obligations Arising Under a Pre-Distribution Tax Sharing
Agreement. Except as set forth in this Agreement, any and all existing Tax
sharing agreements and practices regarding Taxes and their payment, allocation,
or sharing between any member of the International Group and any member of the
OMI Group or its subsidiaries (as defined in Section 3.14 of the Acquisition
Agreement) shall be terminated with respect to the International Group as of the
Distribution Date and no remaining liabilities thereunder shall exist
thereafter.
4.3. Transfer Taxes. International shall prepare (or cause to be prepared)
and timely file (or cause to be timely filed) with the appropriate Tax Authority
all Tax Returns with respect to Transfer Taxes imposed with respect to the
Corporate Restructuring Transactions, the Distribution and the Acquisition.
International shall pay (or cause to be paid) all Transfer Taxes attributable to
the Corporate Restructuring Transactions and the Distribution. International, on
the one hand, and OMI, on the other hand, shall share equally the liability for
all Transfer Taxes attributable to the Acquisition. Notwithstanding anything in
this Section 4.3 to the contrary, if any member of the OMI Group is required to
file a Tax Return in respect of Transfer Taxes, then International shall deliver
to OMI the prepared Tax Return together with amount of Taxes shown to be due on
such Tax Return and for which International is liable at least 5 days prior to
the Due Date thereof and OMI shall timely file (or cause to be timely filed)
with the appropriate Tax Authority such Tax Return as prepared by International
and remit to such Tax Authority the amount of Transfer Taxes shown to be due on
such Tax Return.
The parties hereto shall use reasonable best efforts to reduce any
transfer, sales or other similar Taxes that may be incurred with respect to the
transactions contemplated by the Distribution Agreement and the Acquisition
Agreement.
Section 5. Tax Contests.
5.1. General. International shall have sole control over all Tax Contests
with respect to any Tax Items for which International may be liable pursuant to
this Agreement or the Distribution Agreement, and OMI shall have sole control
over all Tax Contests with respect to any Tax Items for which OMI may be liable
pursuant to this Agreement or the Distribution Agreement. The party controlling
a Tax Contest shall have the sole right to contest, litigate and Dispose of such
Tax Contest and to employ counsel of its choice at its sole expense; provided,
however, that the other party may participate in (but not control) the defense
of any such Tax Contest at its own expense. If pursuant to this Section 5.1, a
Tax Contest presents issues for which both parties may be liable pursuant to
this Agreement or the Distribution Agreement or an issue which affects both the
Domestic Business and the Foreign Business, the party controlling such Tax
Contest shall not litigate or Dispose of such Tax Contest without the prior
written consent of the other party, which shall not be unreasonably withheld or
delayed.
5.2. Tax Contest Management. International or OMI, as the case may be,
shall promptly notify the other party in writing of any Tax Contest that may
reasonably be likely to result in liability of the other party under this
Agreement or the Distribution Agreement. With respect to any such Tax Contest,
the party not controlling such Tax Contest shall (i) not make any submission to
any Tax Authority without offering the other party the opportunity to review and
approve it, (ii) not take any action or make (or purport to make) any
representations in connection with such Tax Contest with respect to issues
affecting the other party's indemnity hereunder, (iii) keep the other party
informed as to any information that it receives regarding the progress of such
Tax Contest, (iv) provide the other party with any information that it receives
regarding the nature and amounts of any proposed Disposition of the Tax Contest,
(v) permit the other party to participate in all conferences, meetings or
proceedings with any Tax Authority in which the indemnified party is or may be a
subject, and (vi) permit the other party to participate in all court appearances
in which the indemnified party is or may be a subject.
Section 6. Subsequent Actions.
(a) Actions Taken After the Spin-Off. Notwithstanding anything to the
contrary in the Acquisition Agreement or the Distribution Agreement, except for
an action permitted by clause (i), (ii), or (iii) of this Section 6(a), none of
OMI, International and any of their respective Affiliates shall take any action
that (A) is inconsistent with (x) the Tax treatment of the Transactions set
forth in the IRS Ruling Letter or (y) a factual statement or a representation
set forth in the Ruling Request (as amended by any supplement) or (B) causes a
Corporate Restructuring Transaction for which a ruling is not requested from the
IRS and which is intended to qualify as a tax-free transaction under Section
332, 351, 355 or 368 of the Code to fail to so qualify.
(i) Approved Actions. OMI and its Affiliates are expressly permitted to
take any Approved Action.
(ii) Subsequent Approved Actions. Each Company and its Affiliates are
expressly permitted to take an action if the other Company has given its prior
written consent, which consent shall not be unreasonably withheld or delayed
unless the action at issue is described by Section 6(a)(A)(y).
(iii) Actions Permitted by a Ruling of a Tax Authority. A Company or any of
its Affiliates may apply for and obtain a ruling with respect to any action from
the IRS (or any other applicable Tax Authority) subject to the provisions of
Section 6(b). If such ruling is reasonably satisfactory to the other Company,
the Company or any of its Affiliates is expressly permitted to take such action.
(b) Amendments and Supplements to the Ruling Request. Except as otherwise
provided in this Section 6(b), each Company covenants and agrees that it will
not file, and it will cause its Affiliates to refrain from filing, any amendment
or supplement to the Ruling Request without the consent of the other Company,
which consent shall not be unreasonably withheld or delayed. With respect to a
proposed action, if one Company or any of such Company's Affiliates (the
"Requesting Party") desires to apply for a ruling from the IRS (or any other
applicable Tax Authority) in accordance with Section 6(a)(iii), such Requesting
Party shall not submit such request for a ruling if the other Company (the
"Requested Party") determines in good faith that the filing of such request is
likely to have a material adverse effect upon such Requested Party, provided,
however, that if the Requested Party makes such determination, the Requesting
Party may dispute such determination, and at the joint expense of both Companies
(shared equally), the Companies shall engage a nationally recognized law firm
reasonably acceptable to both Companies to make a final determination as to
whether the filing of such a ruling request is likely to have a material adverse
effect upon the Requested Party.
Section 7. Survival of Obligations. The representations, warranties,
covenants and agreements set forth in this Agreement shall be unconditional and
absolute and shall remain in effect without limitation as to time.
Section 8. Disagreements. If, after good faith negotiations, the parties
cannot resolve any disagreement on the application of this Agreement to any
matter, then any agreed-upon amount shall be paid to the appropriate party, and
the dispute shall be resolved within 15 days thereafter by a "Big Six"
accounting firm acceptable to both of the parties (the "Accounting Firm"). Any
such resolution by the Accounting Firm will be conclusive and binding on all
parties to this Agreement. The fees and expenses (including the fees and
expenses of its representatives) incurred in connection with the referral to and
decision by the Accounting Firm shall be shared equally by the parties.
Following the decision of the Accounting Firm, each of OMI and International
shall take (or cause to be taken) any action that is necessary or appropriate to
implement such decision, including, without limitation, the filing of amended
Tax Returns and prompt payment of any amounts in dispute plus interest at the
rate specified under Section 6621(a)(2) of the Code.
Section 9. Expenses. Except as provided in Section 8, each Company and its
Affiliates shall bear their respective expenses incurred in connection with
preparation of Tax Returns, Tax Contests, and other matters related to Taxes
under the provisions of this Agreement.
Section 10. Miscellaneous Provisions.
10.1. Addresses and Notices. Any notice, demand, request or report required
or permitted to be given or made to any party under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class mail or by other commercially reasonable means of written
communication (including delivery by an internationally recognized courier
service or by facsimile transmission) to the party at the party's address as
follows:
If to OMI: Director, Taxes
OMI Corp.
90 Park Avenue
New York, NY 10016
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attn: Katherine M. Bristor
and a copy to: Marine Transport Lines, Inc.
1200 Harbor Blvd. C-901
Weehawken, NJ 07087-0901
Attn: General Counsel
If to International: Director, Taxes
OMI Corporation
One Station Place
Stamford, CT 06902
with a copy to: White & Case
1155 Avenue of the Americas
New York, NY 10036
Attn: Paul C. Rooney, Jr.
A party may change the address for receiving notices under this Agreement by
providing written notice of the change of address to the other parties.
10.2. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
10.3. Waiver. No failure by any party to insist upon the strict performance
of any obligation under this Agreement or to exercise any right or remedy under
this Agreement shall constitute waiver of any such obligation, right, or remedy
or any other obligation, rights, or remedies under this Agreement.
10.4. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall
not be affected thereby.
10.5. Interest on Late Payments. Any payment required by this Agreement
which is not made on or before the date required to be made hereunder shall bear
interest after such date at the rate specified in Section 6621(a)(2) of the
Code.
10.6. Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements and understandings pertaining thereto. In the event of any
inconsistency between this Agreement and the Distribution Agreement or any other
agreements relating to the transactions contemplated in furtherance of the
Distribution Agreement, the provisions of this Agreement shall control.
10.7. Construction. The language in all parts of this Agreement shall in
all cases be construed according to its fair meaning and shall not be strictly
construed for or against any party.
10.8. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument
10.9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
executed in and to be performed in that State.
10.10. Amendments. This Agreement may not be amended except by an agreement
in writing, signed by the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by the respective officers as of the date set forth above.
OMI CORP.
By: /s/ Vincent de Sostoa
Title: Senior Vice President
OMI Corporation
By: /s/ Vincent de Sostoa
Title: Senior Vice President
Schedule A
Approved Actions
o Any acquisition of assets or stock from entities that
are not a part of OMI's consolidated group for cash,
stock and/or debt.
o Any sale, exchange or other disposition of one or
more of the assets of OMI in the ordinary course of
operating any of the businesses conducted directly or
indirectly by OMI or MTL, provided that the sale of a
ship generally will be treated as a disposition in
the ordinary course of business, and provided
further, that the sale, exchange or other disposition
of the U.S. Flag business, the Lightering Services
business or the Ship Management business (as each
term is defined in the Ruling Request), in its
entirety, shall not constitute an Approved Action.
o Any sale, exchange or other disposition of one or
more of the assets (including, without limitation,
stock of a subsidiary) or any business of MTL.
o Any issuance of new shares of OMI, provided that, in
the aggregate, such shares and the shares issued in
the Acquisition would not constitute 50% or more of
the equity of OMI if such issuances and the
Acquisition had occurred simultaneously (i.e., at the
time of the Acquisition).
o Any redemption, exchange, transfer or other
disposition of MTL Class B stock (if such stock is
issued), except to the extent limited by the
immediately preceding paragraph.
o Any sale, exchange or other disposition of stock of
OMI or International by any Shareholder except for
sales, exchanges or other dispositions actually
planned or intended at the time of the First Closing
or the Second Closing (as those terms are defined in
the Acquisition Agreement).
o Any borrowing or issuance of new debt by OMI.
o The reflagging of one or more of the following ships:
the Courier, the Patriot and the Rover.
o Any action required or expressly permitted by the
Acquisition Agreement, the Distribution Agreement,
the Tax Cooperation Agreement, the Escrow Agreement
and any ancillary agreement executed among any of
OMI, International and MTL (including, without
limitation, the preparation or filing of any
supplemental request for rulings or any additional
information in accordance with the provisions of
Section 6 of the Tax Cooperation Agreement).
o Any action taken in the ordinary course of operating
any of the businesses conducted directly or
indirectly by OMI or MTL (including, without
limitation, negotiating, entering into or terminating
contracts, hiring and terminating employees and
independent contractors, licenses, leases, charters,
and employment agreements).
o Any action required by law, provided that no
alternative action could reasonably avoid such
required action.
o Any action taken by MTL, OMI or any subsidiary of MTL
or OMI after the second anniversary of the Second
Closing (as defined in the Acquisition Agreement)
unless actually planned before such date.
<PAGE>
TABLE OF CONTENTS
Section 1. Definition of Terms
Section 2. Preparation and Filing of Tax Returns and Payments with Respect
to Taxes
2.1. Preparation of Tax Returns Relating to Foreign Income Taxes and
Other Non-U.S. Taxes
2.2. Preparation of Tax Returns Relating to Federal Income Taxes,
State Income Taxes, and
Other Non-Foreign Taxes
2.3. Filing of Certain Pre-Distribution Period Tax Returns
2.4. Approval of Certain Tax Returns
2.5. Preparation and Filing of Post-Distribution Period Tax Returns
2.6. Modifying Tax Position
2.7. Reporting of Transaction Tax Items
2.8. Right to Review Tax Returns
2.9. Payment of Taxes
Section 3. Assistance and Cooperation
3.1. General
3.2. Tax Information Package
3.3. Retention of Tax Records
3.4. Access to Tax Records
Section 4. Liability for Taxes
4.1. General
4.2. Tax Obligations Arising Under a Pre-Distribution Tax Sharing
Agreement
4.3. Transfer Taxes
Section 5. Tax Contests
5.1. General
5.2. Tax Contest Management
Section 6. Subsequent Actions
(a) Actions Taken After the Spin-Off
(b) Amendments and Supplements to the Ruling Request
Section 7. Survival of Obligations
Section 8. Disagreements
Section 9. Expenses
Section 10. Miscellaneous Provisions
10.1. Addresses and Notices
10.2. Binding Effect
10.3. Waiver
10.4. Invalidity of Provisions
10.5. Interest on Late Payments
10.6. Integration
10.7. Construction
10.8. Counterparts
10.9. Governing Law
10.10. Amendments
June 17, 1998
To the Board of Directors of OMI Corp.
Gentlemen:
I hereby resign as director effective upon consummation of the acquisition
of Marine Transport, Lines, Inc.
/s/ Craig H. Stevenson
------------------------------
Craig H. Stevenson
June 17, 1998
To the Board of Directors of OMI Corp.
Gentlemen:
I hereby resign as director effective upon consummation of the acquisition
of Marine Transport, Lines, Inc.
/s/ Jack Goldstein
------------------------------
Jack Goldstein
May 4 1998
I, Steven D. Jellinek, hereby resign as a director of OMI Corp. effective
as of May 4, 1998.
/s/ Steven D. Jellinek
Borghese Investments
520 Madison Avenue - 32nd Floor
New York, NY 10022
Telephone:(212) 750-5188
Telefax: (212) 750-4635
May 13, 1998
Mr. David N. Brown
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044-7566
Dear Mr. Brown:
I, Livio M. Borghese, hereby resign as a director of OMI Corp. effective as
of May 4, 1998.
Thank you.
Sincerely yours,
/s/ Livio M. Borghese
Livio M. Borghese
May 1, 1998
I, Emanuel L. Rouvelas, hereby resign as a director of OMI Corp. effective
as of May 4, 1998.
/s/ Emanuel L. Rouvelas
------------------------------
Emanuel L. Rouvelas
June 17, 1998
To the Board of Directors of OMI Corp.
Gentlemen:
I hereby resign as director effective upon consummation of the
acquisition of Marine Transport, Lines, Inc.
/s/ C.G. Caras
------------------------------
Constantine G. Caras
Marianne K. Smythe
4807 Wellington Drive
Chevy Chase, MD 20815
May 4, 1998
To Whom It May Concern:
I, Marianne Koral Smythe, hereby resign as director of OMI Corp., effective
as of Monday, May 4, 1998.
/s/ Marianne K. Smythe
Marianne K. Smythe
June 17, 1998
To the Board of Directors of OMI Corp.
Gentlemen:
I hereby resign as director effective upon consummation of the acquisition
of Marine Transport, Lines, Inc.
/s/ Robert Bugbee
------------------------------
Robert Bugbee
Marine Transport Corporation
To Begin Trading on Nasdaq - 'MTLX':
MARAD Contract Renewed for 5 Years
New York - June 17, 1998 - Marine Transport Corporation, a company to be formed
through the acquisition by OMI Corp. (OMI) of Marine Transport Lines, Inc., the
oldest shipping company in the United States, begins trading tomorrow, June 18,
1998 on the Nasdaq National Market, symbol "MTLX".
Privately held Marine Transport Lines, an owner, operator and manger of
primarily U.S. flag shipping assets, will be combined with the domestic
operations of OMI, and will retain OMI's public company status. OMI's
international business will be spun off and operate as OMI Corporation, and will
be separately traded on the New York Stock Exchange, symbol "OMM".
Richard du Moulin, Chairman and Chief Executive Officer of Marine Transport
Lines, who will assume the same position as Marine Transport Corporation said,
"Our growth strategy includes strategic acquisitions and expansion of the
Company's specialized shipping services in its chemical, oil and ship management
sectors."
It was also announced that the U.S. Maritime Administration ("MARAD") has
awarded long term contracts for Marine Transport Lines to operate a total of 10
ships. A previous contract covered 9 ships. No MARAD contracts were awarded to
OMI Ship Management which will become part of Marine Transport Corporation. The
Company will receive additional compensation in the acquisition to adjust for
the lack of such contracts, which in 1997 produced approximately $1.7 million of
revenue offset by $1 million of direct expenses, plus certain allocated
corporate overhead.
Marine Transport Corporation will be a U.S.-based supplier of marine
transportation services. Its 1997 pro forma revenue was approximately $120
million. The Company will own and/or manage 27 ships, 6 supply vessels and 4
chartered-in tankers, making it one of the largest U.S.-based fleets of ocean
going vessels. The Company's core businesses will be industrial shipping based
on long term alliances, some as long as 50 years, with leading chemical and
energy customers and ship management. As an operator with International Safety
Management (ISM) certification, the Company will be able to provide services to
support U.S. and international shipping expansion for quality-conscious
commercial and U.S. government customers.
Contact: Mark Filanowski
Marine Transport Lines
201) 330-0200 x303
OMI Completes First Phase of Acquisition
Wednesday, June 17, 1998 01:28 PM
NEW YORK--(BUSINESS WIRE)--June 17, 1998--OMI Corp. (OMM:NYSE) announced today
that it has completed the first phase of the previously announced acquisition of
Marine Transport Lines Inc. (MTL) and has notified the New York Stock Exchange
that all preconditions to the distribution of OMI's foreign shipping business
have been met.
OMI said that holders of record at the close of business on June 16, 1998 would
participate in the distribution. The second phase of the acquisition of MTL will
become effective at 12:01 a.m. on June 18, 1998 and regular way trading in OMI
Corporation (OMM), successor to OMI's foreign business, will begin June 18,
1998.
OMI's domestic business, combined with the operations of MTL and renamed Marine
Transport Corporation, will be separately traded on the Nasdaq National Market
under the symbol MTLX beginning June 18, 1998 on the basis of one for ten
reverse stock split approved by stockholders earlier this week. Holders of
record at the opening of business on June 18, will participate in the reverse
split which applies only to the stock of the renamed Marine Transport
Corporation.
OMI Corporation is a major international bulk shipping company. Its operating
fleet currently comprises 27 vessels (one of which is being held for sale),
aggregating approximately 2.6 million dwt. The Company also has on order from a
shipyard four Suezmax tankers aggregating approximately 630,000 dwt (and has
options for two more) and two product carriers aggregating 70,000 dwt.
Contact: OMI Corp.
Fredric London
(212) 297-2160
Stockholders Approve Acquisition
Tuesday, June 16, 1998 11:36 AM
NEW YORK--(BUSINESS WIRE)--June 16, 1998--OMI Corp. (OMM:NYSE) announced today
that its stockholders had approved the previously announced acquisition of
Marine Transport Lines, Inc. and all of the other matters submitted to
stockholders except the proposal to amend OMI's certificate of incorporation to
change the number of directors.
OMI Corp.'s Craig Stevenson said the Company was pleased with the results of the
meeting which permits OMI to complete the acquisition of MTL and proceed with
the distribution of OMI foreign shipping business to stockholders.
Mr. Stevenson said that he anticipated that the acquisition and distribution
would both be completed this week.
OMI Corp. is a major bulk shipping company, operating in both international and
U.S. markets. Its international operating fleet currently comprises 27 vessels,
aggregating approximately 2.6 million dwt. This includes one vessel being held
for sale and excludes four vessels time charted by a U.S. subsidiary, which
along with its other U.S. operations, are not to be included in the spin-off of
OMI's international operations. The Company also has on order from a shipyard
four Suezmax tankers aggregating 624,000 dwt (and has options for two more) and
two product carriers aggregating 70,000 dwt.
Contact: OMI Corp.
Fredric London
(212) 297-2160
OMI Announces Spin-off Record Date
Friday, June 5, 1998 09:50 AM
NEW YORK--(BUSINESS WIRE)--June 5, 1998--OMI Corp. (OMM:NYSE) announced that the
Board of Directors of OMI Corp. has conditionally set June 16, 1998 as the
record date for the previously announced spin-off of its international
operations to its stockholders.
The spin-off is contingent on the approval by the Company's stockholders at its
June 15 Annual Meeting of the previously announced two step acquisition of
Marine Transport Lines, Inc. ("MTL") and the consumption of the first step of
that transaction. If the conditions to the spin-off are satisfied, OMI
Corporation ("New OMI"), a wholly-owned Marshall Islands subsidiary of the
Company, will be spun-off to the Company's stockholders of record as of June 16,
1998. New OMI holds all of the assets, liabilities and operation of the
Company's international business. No stockholder of the Company will be required
to pay any cash or other consideration for the shares of New OMI received in the
spin-off or to exchange its shares of the Company in order to receive shares of
New OMI.
In connection with the spin-off, New OMI will succeed to the Company's current
listing with the NYSE and, effective on June 18, 1998, the common stock of New
OMI will trade on the NYSE under the symbol "OMM". Following the spin-off the
Company will, among other things, acquire all outstanding shares of MTL, change
its name to "Marine Transport Corporation", effect a one-for-ten reverse stock
split and, effective on June 18, 1998, commence trading on the Nasdaq National
Market under the symbol "MTLX".
OMI Corp. is a major bulk shipping company, operating in both international and
U.S. markets. Its international operating fleet currently comprises 26 vessels,
aggregating approximately 2.5 million dwt. This includes one vessel being held
for sale and excludes four vessels time chartered by a U.S. subsidiary, which
along with its other U.S. operations, are not to be included in the spin-off of
OMI's international operations. The Company also has on order from a shipyard
five Suezmax tankers aggregating 780,000 dwt (and has options for two more) and
two product carriers aggregating 70,000 dwt.
Contact: OMI Corp.
Fredric London
(212) 297-2160
