Republic of the Marshall Islands
4412
Not Applicable
(State or other jurisdiction of incorporation or organization)
Primary Standard Industrial Classification Code Number
(I.R.S. Employer Identification No.)
A. Jeffry Robinson, P.A.
Broad and Cassel 201 S. Biscayne Boulevard, Suite 3000 Miami, Florida 33131 Telephone: (305) 373-9400 Facsimile: (305) 995-6402 |
Gary J. Wolfe, Esq.
Seward & Kissel LLP One Battery Park Plaza New York, New York 10004 Telephone: (212) 574-1200 Facsimile: (212) 480-8421 |
Proposed Maximum | Proposed Maximum | ||||||||
Title of Each Class | Offering Price | Aggregate Offering | Amount of | ||||||
of Securities to Be Registered | Amount to be Registered(1) | per Share(2) | Price(2) | Registration Fee | |||||
Common Stock, par value US $.001 per share
|
1,782,600 shares(3) | US$5.25(4) | US$9,358,650.00 | US$1,101.51 | |||||
Class W and Class Z Warrants to purchase Common
Stock, par value US $.001 per share
|
3,657,500 warrants(5) | US$5.00 | US$18,287,500.00 | US$2,152.44 | |||||
Common Stock, par value US $.001 per share, underlying the
Class W and Class Z Warrants
|
3,657,500 shares(5) | | | | |||||
Underwriters Unit Purchase Option
|
1 option(6) | US$100.00 | US$100.00 | US$0.01 | |||||
Series A Units underlying the Underwriters Unit
Purchase Option
|
12,500 units | US$17.325 | US$216,562.50 | US$25.49 | |||||
Series B Units underlying the Underwriters Unit
Purchase Option
|
65,000 units | US$16.665 | US$1,083,225.00 | US$127.50 | |||||
Common Stock, par value US $.001 per share, included in
the Underwriters Series A Units and
Underwriters Series B Units
|
155,000 shares | | | | |||||
Warrants included in the Underwriters Series A
Units and Underwriters Series B Units
|
255,000 warrants | | | | |||||
Common Stock, par value US $.001 per share, underlying the
Warrants included in the Underwriters Series A Units
and Underwriters Series B Units
|
255,000 shares | US$5.50 | US$1,402,500.00 | US$165.07 | |||||
Common Stock, par value US $.001 per share
|
4,500,000 shares(7) | US$5.25(4) | US$23,625,000.00 | US$2,780.66 | |||||
Common Stock, par value US $.001 per share
|
950,000 shares(8) | US$5.00 | US$4,750,000.00 | US$559.08 | |||||
Common Stock, par value US $.001 per share
|
100 shares(9) | US$5.25(4) | US$525.00 | US$0.06 | |||||
Common Stock, par value $.001 per share, underlying
Class W and Class Z Warrants
|
725,000 shares(10) | US$5.00 | US$3,625,000 | US$426.66 | |||||
TOTAL
|
US$62,349,062 | US$7,338.48 |
(1) | Also includes, pursuant to Rule 416 under the Securities Act of 1933 (the Securities Act), an indeterminant number of shares, warrants and options that may be issued, offered or sold to prevent dilution resulting from stock splits, stock dividends, or similar transactions. | |
(2) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act. | |
(3) | Shares to be issued to the holders of outstanding common stock of Trinity Partners Acquisition Company, Inc. (Trinity) in connection with the merger of Trinity with and into the Registrant (the Merger). | |
(4) | Based on the average of the bid and asked prices of Trinitys Class B common stock on the over-the-counter market on May 9, 2005. | |
(5) | Class W and Class Z warrants to be issued in connection with the Merger, each of which are exercisable to purchase one share of Common Stock at an exercise price of US$5.00 per share. | |
(6) | Sold by Trinity to the representative of the underwriters in Trinitys 2004 public offering and to be assumed by the Registrant upon consummation of the Merger. | |
(7) | Shares currently outstanding that are being registered on behalf of certain selling shareholders of the Registrant. | |
(8) | Shares issuable upon the exercise of currently outstanding options and warrants, which shares are being registered on behalf of certain selling shareholders, and which options and warrants are exercisable to purchase one share of Common Stock at an exercise price of US $5.00 per share. | |
(9) | Shares to be issued to certain affiliates of Trinity in connection with the Merger, which affiliates are identified herein as selling shareholders. |
(10) | Shares underlying Class W and Class Z Warrants to be issued to certain affiliates of Trinity in connection with the Merger, which affiliates are identified herein as selling shareholders. |
Information
contained herein is subject to completion or amendment. A
registration statement relating to these securities has been
filed with the Securities and Exchange Commission. We may not
sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state in
which the offer or sale is not
permitted.
|
For Trinity Class B stockholders: | |
[ Insert Address ] | |
[ Insert Date ] | |
[ Insert Time ] |
|
|
James Scibelli | |
Chairman of the Board of Trinity |
1. to consider and vote upon a proposal to approve and authorize the Agreement and Plan of Merger, dated March 24, 2005, among FreeSeas, V Capital S.A., a corporation organized under the laws of the Republic of the Marshall Islands, G Bros S.A., a corporation organized under the laws of the Republic of the Marshall Islands, George D. Gourdomichalis, Efstathios D. Gourdomichalis and Ion G. Varouxakis (together with their permitted successors and assigns, collectively, the FreeSeas Shareholders), and Trinity, pursuant to which Trinity will merge with and into FreeSeas, the separate corporate existence of Trinity will cease, and FreeSeas will be the Surviving Corporation, as more particularly described in the joint proxy statement/ prospectus; and | |
2. to transact such other business as may properly come before the special meeting related to the merger. |
By order of the Board of Directors, | |
|
|
James Scibelli | |
Chairman of the Board |
1 | ||
4 | ||
5 | ||
9 | ||
10 | ||
11 | ||
11 | ||
13 | ||
24 | ||
25 | ||
29 | ||
31 | ||
37 | ||
48 | ||
49 | ||
75 | ||
78 | ||
80 | ||
84 | ||
86 | ||
89 | ||
89 | ||
91 | ||
93 | ||
93 | ||
93 | ||
93 | ||
94 | ||
95 | ||
F-1 | ||
F-12 | ||
i
Q: | What is the purpose of this document? | |
A: | This document serves as Trinitys proxy statement and as the prospectus of FreeSeas. As a proxy statement, this document is being provided to Trinity Class B stockholders because the Trinity Board of Directors is soliciting their proxies to vote to approve the Merger Agreement. As a prospectus, FreeSeas is providing this document to Trinity stockholders because FreeSeas is offering its shares and warrants in exchange for shares of Trinity Capital Stock and warrants in the merger. | |
Q: | Could you tell me more about FreeSeas? | |
A: | FreeSeas is a privately held Marshall Islands corporation headquartered in Piraeus, Greece, which was organized in April 2004. FreeSeas, through wholly owned subsidiaries, currently owns and operates two Handysize drybulk carriers, M/ V Free Destiny and M/ V Free Envoy , and currently expects to acquire an additional vessel before the end of the second quarter of 2005. | |
Q: | When and where is the special meeting of Trinity Class B stockholders? | |
A: | The special meeting of Trinity Class B stockholders will take place at [ insert address ] on [ insert day ], [ insert date ], 2005, at [ insert time ]. | |
Q: | What matters will we be asked to vote on at the Trinity special meeting? | |
A: | At the special meeting, you will be asked: | |
to approve and authorize the Merger Agreement; and | ||
to transact such other business as may properly come before the special meeting related to the merger. | ||
Q: | What is the required vote to approve and authorize the Merger Agreement? | |
A: | Pursuant to the Merger Agreement, Trinity will merge with and into FreeSeas, the separate corporate existence of Trinity will cease and FreeSeas will be the Surviving Corporation. Trinity cannot complete the merger unless (1) the holders of at least a majority of the issued and outstanding shares of Trinity Class B common stock approve and authorize the Merger Agreement, (2) less than 20% of the Trinity Class B stockholders exercise their redemption rights, and (3) the aggregate payments to be made to dissenting Trinity Class B stockholders who exercise their statutory appraisal rights do not cause Trinity to have less than $7,000,000 in cash and cash equivalents at the time of the consummation of the merger. See Description of Trinity Securities-Common Stock and Class B Common Stock. Each share of Trinity Class B common stock is entitled to one vote per share. | |
Q: | Who may vote at the special meeting? | |
A: | Only holders of record of shares of Trinity Class B common stock as of the close of business on [ insert date ], 2005 may vote at the special meeting. As of [ insert date ], 2005, there were [ insert number ] shares of Trinity Class B common stock outstanding and entitled to vote. | |
Q: | Has the Board of Director of Trinity recommended approval of the merger? | |
A: | Yes. Trinitys Board of Directors has unanimously recommended to its Class B stockholders that they vote FOR the approval and authorization of the Merger Agreement at the special meeting. You should read the Background and Reasons For The Merger Recommendations of the Boards of Directors and Reasons for the Merger section of this joint proxy statement/ prospectus for a discussion of the factors that the Trinity Board of Directors considered in deciding to recommend the approval and authorization of the Merger Agreement. | |
Q: | What will I receive in the merger? | |
A: | Pursuant to the Merger Agreement, each outstanding share of Trinity Capital Stock will be converted into the right to receive one share of FreeSeas common stock. The Merger Agreement also provides that FreeSeas will assume each outstanding Trinity warrant and option in accordance with the terms of the agreement under which it was issued and all rights with respect to Trinity Capital Stock under each Trinity warrant and option then outstanding will be converted into and become warrants and options in FreeSeas (the FreeSeas Exchange Securities). The FreeSeas Exchange Securities will |
1
contain the same terms, conditions and restrictions that were applicable to the Trinity warrants and options. FreeSeas shareholders will continue to hold the FreeSeas shares they currently own. In addition, the FreeSeas Shareholders will hold 950,000 options and/or warrants to acquire shares in FreeSeas. | ||
Q: | What are the tax consequences of the merger to me? | |
A. | We expect that the merger will be treated as a nontaxable reorganization for U.S. federal income tax purposes. Because the merger will be treated as a nontaxable reorganization for U.S. federal income tax purposes, Trinity stockholders will not recognize gain or loss as a result of the merger. In addition, Trinity stockholders will not recognize gain or loss upon the exchange of their shares of Trinity Capital Stock solely for shares of FreeSeas common stock pursuant to the merger. However, a dissenting Trinity stockholder who solely receives cash in exchange for his or her shares of Trinity Capital Stock generally will recognize gain or loss. The federal income tax consequences of the merger are complicated and may differ for individual stockholders. We strongly urge each Trinity stockholder to consult his or her own tax advisor regarding the federal income tax consequences of the merger in light of his or her own personal tax situation and also as to any state, local, foreign or other tax consequences arising out of the merger. | |
Q: | What do I need to do now? | |
A: | After carefully reading and considering the information contained in this joint proxy statement/ prospectus, please vote your shares of Trinity Class B common stock as soon as possible. You may vote your shares prior to the special meeting by signing and returning the enclosed proxy card. If you hold your shares in street name (which means, in other words, that you hold your shares through a bank, brokerage firm or nominee), you must vote in accordance with the instructions on the voting instruction card that your bank, brokerage firm or nominee provides to you. | |
Q: | If my shares are held in street name by my bank, brokerage firm or nominee, will they automatically vote my shares for me? | |
A: | No. Your bank, brokerage firm or nominee cannot vote your shares without instructions from you. You should instruct your bank, brokerage firm or nominee how to vote your shares, following the instructions contained in the voting instruction card that your bank, brokerage firm or nominee provides to you. | |
Q: | What if I abstain from voting or fail to instruct my bank, brokerage firm or nominee? | |
A: | Abstaining from voting or failing to instruct your bank, brokerage firm or nominee to vote your shares will have the same effect as a vote against the merger. | |
Q: | Can I change my vote after I have mailed my proxy card? | |
A: | Yes. You may change your vote at any time before your proxy is voted at the special meeting. You may revoke your proxy by executing and returning a proxy card dated later than the previous one, by attending the special meeting in person and casting your vote by ballot or by submitting a written revocation stating that you would like to revoke your proxy. If you hold your shares through a bank, brokerage firm or nominee, you should follow the instructions of your bank, brokerage firm or nominee regarding the revocation of proxies. You should send any notice of revocation or your completed new proxy card, as the case may be, to: |
Trinity Partners Acquisition Company Inc. | |
245 Fifth Avenue, Suite 1600 | |
New York, New York 10016 | |
Attention: Corporate Secretary |
2
Q: | Should I send in my stock certificates now? | |
A: | No. After we complete the merger, you will receive written instructions for returning your stock certificates. These instructions will tell you how and where to send in your stock certificates in order to receive the merger consideration. | |
Q: | What if I object to the merger? | |
A: | Under applicable Delaware law, Trinity stockholders have the right to dissent by exercising appraisal rights and demanding payment of the fair value of their shares. See The Merger Agreement-Appraisal Rights and Appraisal Rights. |
3
Trinity Partners Acquisition Company Inc.
|
FreeSeas Inc. | |
245 Fifth Avenue
|
93 Akti Miaouli | |
Suite 1600
|
Piraeus, Greece | |
New York, New York 10016
|
Attn: Corporate Secretary | |
Attn: Corporate Secretary
|
Telephone: 011-30-2104-528770 | |
Telephone: (212) 696-4282
|
4
5
6
7
8
Trinity Partners Acquisition Company Inc.
FreeSeas Inc.
by mutual consent in writing of Trinity and the FreeSeas
Shareholders;
unilaterally upon written notice by Trinity to the FreeSeas
Shareholders upon the occurrence of a material adverse effect
with respect to FreeSeas, the likelihood of which was not
previously disclosed to Trinity in writing by the FreeSeas
Shareholders prior to the date of the Merger Agreement;
unilaterally upon written notice by the FreeSeas Shareholders to
Trinity upon the occurrence of a material adverse effect with
respect to Trinity, the likelihood of which was not previously
disclosed to the FreeSeas Shareholders in writing by Trinity
prior to the date of the Merger Agreement;
unilaterally upon written notice by Trinity to the FreeSeas
Shareholders in the event of a material breach of any material
representation or warranty of FreeSeas or the FreeSeas
Shareholders contained in the Merger Agreement (unless such
breach shall have been cured within ten (10) days after the
giving of notice by Trinity), or the willful failure of FreeSeas
or the FreeSeas Shareholders to comply with or satisfy any
material covenant or condition of FreeSeas or the FreeSeas
Shareholders contained in the Merger Agreement;
unilaterally upon written notice by the FreeSeas Shareholders to
Trinity in the event of a material breach of any material
representation or warranty of Trinity contained in the Merger
Agreement (unless such breach shall have been cured by Trinity
within ten (10) days after the giving of notice by the
FreeSeas Shareholders), or Trinitys willful failure to
comply with or satisfy any material covenant or condition of
Trinity contained in the Merger Agreement, or if Trinity fails
to obtain Class B stockholders approval for the
merger; or
unilaterally upon written notice by either Trinity or the
FreeSeas Shareholders to the other if the merger is not
consummated for any reason by the close of business on
July 31, 2005.
9
From Inception
(April 23, 2004)
to December 31,
2004
$
2,535,000
411,000
59,000
$
470,000
December 31,
2004
$
461,000
(3,528,000
)
18,335,000
9,978,000
$
3,386,000
From Inception
(April 14, 2004) to
December 31, 2004
$
(139,000
)
53,000
(86,000
)
1,021,000
$
(0.08
)
December 31,
2004
$
484,000
8,037,000
8,110,000
1,519,000
$
6,518,000
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
F-1
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
A-1
B-1
B-2
B-3
B-4
C-1
C-2
II-1
II-2
II-3
II-4
II-5
II-6
December 31, 2004
Assuming
Assuming
Maximum
Minimum
Approval
Approval
$
35,068,538
$
33,549,048
14,467,500
14,467,500
$
9,748,076
$
8,228,586
FreeSeas
(Surviving
FreeSeas
Trinity
Company)
4,500,000
1,782,600
6,282,600
72
%
28
%
100
%
4,500,000
1,483,749
5,983,749
75
%
25
%
100
%
$
(0.08
)
$
4.39
$
1.55
$
1.38
Class B
Class W
Class Z
Common Stock
Common Stock
Warrants
Warrants
High
Low
High
Low
High
Low
High
Low
$
3.50
$
2.75
$
4.75
$
4.55
$
1.00
$
0.55
$
1.00
$
0.55
3.50
2.75
4.90
4.58
0.90
0.55
1.01
0.55
5.10
3.80
5.95
4.62
1.60
0.70
1.62
1.08
3.85
3.85
4.75
4.75
0.70
0.70
1.01
1.01
$
5.08
$
5.08
$
5.40
$
5.40
$
1.05
$
1.05
$
1.10
$
1.10
(1)
The last full trading day prior to the announcement of a
proposal for a business combination involving FreeSeas.
(2)
The last full trading day prior to the announcement of the
execution of the Merger Agreement.
There may not be an active market for FreeSeas
shares, which may cause its shares to trade at a discount and
make it difficult to sell your shares.
The price of FreeSeas shares after the merger may be
volatile.
actual or anticipated fluctuations in quarterly and annual
results;
mergers and strategic alliances in the shipping industry;
market conditions in the industry;
changes in government regulation;
fluctuations in FreeSeas quarterly revenues and earnings
and those of its publicly held competitors;
shortfalls in FreeSeas operating results from levels
forecasted by securities analysts;
announcements concerning FreeSeas or its competitors; and
the general state of the securities markets.
You will experience a reduction in percentage ownership
and voting power with respect to your shares as a result of the
merger.
FreeSeas current shareholders will control
approximately 72% of FreeSeas after the merger and will
effectively control the outcome of matters on which FreeSeas
shareholders are entitled to vote, including the election of
directors and other significant corporate actions.
FreeSeas Articles of Incorporation and By-laws
contain anti-takeover provisions that may discourage, delay or
prevent (1) the merger or acquisition of FreeSeas and/or
(2) the removal of incumbent directors and officers.
Trinitys current officers and directors will resign
upon consummation of the merger.
Trinity and FreeSeas expect to incur significant costs
associated with the merger, whether or not the merger is
completed and the incurrence of these costs will reduce the
amount of cash available to be used for other corporate
purposes.
As a result of the merger, Trinity stockholders will be
solely dependent on a single business.
Trinitys and FreeSeas pro forma accounting for
the transaction may change and the impact of these changes could
be material and negative to FreeSeas post-transaction
balance sheet.
Trinity may waive one or more of the conditions to the
merger without resoliciting Class B stockholder approval
for the merger.
The failure of any one of a number of conditions could
prevent the merger with FreeSeas from being consummated and
could result in the Trinity trust fund being distributed to the
Trinity Class B stockholders.
If the merger does not qualify as a nontaxable
reorganization under the U.S. Internal Revenue Code, the
transaction may be a taxable event to Trinitys
stockholders.
The cyclical nature of the shipping industry may lead to
volatile changes in freight rates and vessel values which may
adversely affect FreeSeas profitability.
general economic and market conditions affecting the shipping
industry;
supply of drybulk vessels;
demand for drybulk vessels;
types and sizes of vessels;
other modes of transportation;
cost of newbuildings;
new regulatory requirements from governments or self-regulated
organizations; and
prevailing level of charter rates.
The international drybulk shipping industry reached an
historic high recently and future growth will depend on
continued economic growth in the world economy that exceeds the
capacity of the growing world fleets ability to match
it.
supply and demand for drybulk commodities;
global and regional economic conditions;
the distance drybulk commodities are to be moved by sea; and
changes in seaborne and other transportation patterns.
the number of newbuilding deliveries;
the scrapping rate of older vessels;
changes in environmental and other regulations that may limit
the useful life of vessels;
the number of vessels that are laid up; and
changes in global drybulk commodity production.
An economic slowdown in the Asia Pacific region could have
a material adverse effect on FreeSeas business, financial
position and results of operations.
FreeSeas may become dependent on spot charters in the
volatile shipping markets.
FreeSeas is subject to regulation and liability under
environmental laws that could require significant expenditures
and affect its cash flows and net income.
If FreeSeas vessels fail to maintain their class
certification and/or fail any annual survey, intermediate
survey, drydocking or special survey, it could have a material
adverse impact on FreeSeas financial condition and results
of operations.
Maritime claimants could arrest FreeSeas vessels,
which could interrupt its cash flow.
Governments could requisition FreeSeas vessels
during a period of war or emergency, resulting in loss of
earnings.
World events outside FreeSeas control may negatively
affect its operations and financial condition.
FreeSeas will depend entirely on Free Bulkers to manage
and charter its fleet.
Free Bulkers is a privately held company and there is
little or no publicly available information about it.
FreeSeas and its principal officers have affiliations with
Free Bulkers that could create conflicts of interest.
FreeSeas has a short operating history and cannot assure
you that it will continue to operate profitably in the
future.
If FreeSeas fails to manage its planned growth properly,
it may not be able to successfully expand its market
share.
locating and acquiring suitable vessels;
identifying and consummating acquisitions or joint ventures;
integrating any acquired business successfully with its existing
operations;
enhancing its customer base;
managing its expansion; and
obtaining required financing.
A decline in the market value of FreeSeas vessels
could lead to a default under FreeSeas loan agreements and
the loss of FreeSeas vessels.
FreeSeas existing loan agreements contain
restrictive covenants that may limit its liquidity and corporate
activities.
incur additional indebtedness;
create liens on its assets;
sell capital stock of its subsidiaries;
make investments;
engage in mergers or acquisitions;
pay dividends;
make capital expenditures;
change the management of its vessels or terminate or materially
amend the management agreement relating to each vessel; and
sell its vessels.
Servicing future debt would limit funds available for
other purposes.
FreeSeas ability to obtain additional debt financing
may be dependent on the performance of its then existing
charters and the creditworthiness of its charterers.
As FreeSeas expands its business, it will need to upgrade
its operations and financial systems, and add more staff and
crew. If it cannot upgrade these systems or recruit suitable
employees, its performance may be adversely affected.
In the highly competitive international drybulk shipping
industry, FreeSeas may not be able to compete for charters with
new entrants or established companies with greater
resources.
FreeSeas may be unable to attract and retain key
management personnel and other employees in the shipping
industry, which may negatively affect the effectiveness of its
management and its results of operations.
Risks involved with operating ocean going vessels could
affect FreeSeas business and reputation, which would
adversely affect its revenues.
crew strikes and/or boycotts;
marine disaster;
piracy;
environmental accidents;
cargo and property losses or damage; and
business interruptions caused by mechanical failure, human
error, war, terrorism, political action in various countries,
labor strikes or adverse weather conditions.
FreeSeas vessels may suffer damage and it may face
unexpected drydocking costs, which could affect its cash flow
and financial condition.
Purchasing and operating previously owned, or secondhand,
vessels may result in increased operating costs and vessels
off-hire, which could adversely affect FreeSeas
earnings.
FreeSeas may not have adequate insurance to compensate it
if it loses its vessels.
FreeSeas operations outside the United States expose
it to global risks that may interfere with the operation of its
vessels.
FreeSeas is incorporated in the Republic of the Marshall
Islands, which does not have a well-developed body of corporate
law.
the Surviving Corporations future operating or financial
results;
future, pending or recent acquisitions, business strategy, areas
of possible expansion, and expected capital spending or
operating expenses; and
drybulk market trends, including charter rates and factors
affecting vessel supply and demand.
Trinity Class B stockholders have adopted the Merger
Agreement;
holders of less than 20% of the shares of Trinity Class B
common stock issued in Trinitys initial public offering
vote against the merger proposal and demand redemption of their
shares for cash; and
the other conditions specified in the Merger Agreement have been
satisfied or waived.
(a) Reflects the transaction through the elimination of
Trinitys accumulated deficit and accumulated other
comprehensive income and adjustment of equity accounts to
reflect 4,500,000 shares of FreeSeas outstanding prior to
the transaction and the issuance of FreeSeas common stock for
Trinity common stock.
(b) Reflects the release of Trinitys restricted cash
held in trust as a result of the transaction, net of estimated
direct transaction costs of FreeSeas and Trinity charged to
additional paid-in capital. Approximately $400,000 of FreeSeas
transaction costs, not expected to be paid at closing, are
included in accounts payable and accrued expenses.
(c) Reflects the reclassification of the redemption value
of the Trinity Class B common stock to Stockholders
Equity assuming no stock redemption.
(d) Reflects the conversion of outstanding Trinity
Class B common stock into FreeSeas common stock.
(e) Reflects the redemption of 19.99% of Trinity
Class B common stock, or 298,851 shares, at the
December 31, 2004 redemption value of $5.08 per share.
The number of shares assumed redeemed is based on 19.99% of the
total shares of Trinity Class B common stock outstanding
prior to the transaction of 1,495,000 and represents the maximum
number of shares that may be elected to be redeemed without
precluding the consummation of the transaction.
(f) Reflects the acquisition of a new vessel at purchase
price of $11,025,000 pursuant to a memorandum of agreement
entered into in April 2005. In April 2005, the shareholders of
FreeSeas made an interest-free loan to FreeSeas in the amount of
$1,102,500, which was used by FreeSeas as the deposit required
by the memorandum of agreement to be paid to the seller. Trinity
and FreeSeas have agreed that this loan will be repaid to the
FreeSeas shareholders immediately following the closing of the
transaction. FreeSeas is currently in the process of obtaining
third-party financing for the balance of the purchase price due.
For pro forma purposes the expected debt financing has been
presented based on FreeSeas managements estimate of the
expected terms to be agreed upon with a third-party lender.
by executing and returning a proxy card dated later than the
previous one to Trinity at 245 Fifth Avenue, Suite 1600,
New York, New York 10016, Attention: Corporate Secretary;
by attending the special meeting in person and casting your vote
by ballot; or
by submitting a written revocation to Trinity at 245 Fifth
Avenue, Suite 1600, New York, New York 10016, Attention:
Corporate Secretary.
Financial condition and results of operations;
Costs associated with effecting the business combination;
Equity interest in and opportunity for control of the acquired
business;
Growth potential of the acquired business and the industry in
which it operates;
Experience and skill of management and availability of
additional necessary personnel of the acquired business;
Capital requirements of the acquired business;
Competitive position of the acquired business;
Stage of development of the product, process or service of the
acquired business;
Degree of current or potential market acceptance of the product,
process or service of the acquired business;
Proprietary feature and degree of intellectual property or other
protection of the product, process or service of the acquired
business; and
Regulatory environment of the industry in which the acquired
business operates.
Nature of Business
Unsatisfied Acquisition Criteria
Health Care
(fitness centers)
Uncertainty whether satisfactory terms could be negotiated with
owners giving Trinity sufficient equity interest in view of the
amount of capital to be made available to owners; limited
barriers to entry; and very intense competitive environment
Home Building
(supplier of services to home builders)
Concern that home building industry would experience
deceleration due to higher interest rates; and significant
dependence on certain regional housing markets, such as
California, creating additional potential exposure to a decline
in the housing market
Leisure Industry
(motor scooter company)
Inability to obtain adequate financial data and projections to
assess future profit-ability; manufacturing overseas might have
required more capital than available; and lack of sufficient
infrastructure to ensure execution of business plan
there has been strong raw materials demand in recent years by
developing countries, particularly China and India, that has
resulted in robust growth for drybulk shipping as well as
increased freight rates, attributable in part to industrywide
capacity constraints. As a result, the drybulk shipping sector
has been attracting growing investor interest, with a number of
drybulk and other seaborne shipping companies recently
completing or planning public financings in the United States of
America and other financial markets;
FreeSeas has an experienced, highly regarded management team,
which Trinitys Board believes is well suited to pursue a
strategy of acquiring and operating drybulk vessels;
the opportunity to leverage Trinitys capital to obtain
debt financing to expand FreeSeas fleet in an effort to
increase FreeSeas operating results;
the fact that the merger was the result of a comprehensive
review conducted by Trinitys Board (with the assistance of
its financial and legal advisors) of the strategic alternatives
available to Trinity; and
the fact that the merger should constitute a tax-free
reorganization under the Internal Revenue Code of 1986, as
amended (the Code).
the fact that FreeSeas is a recently formed foreign corporation
with a limited operating history and that Trinitys
stockholders will have minority ownership in FreeSeas following
consummation of the merger;
a macroeconomic slowdown, particularly in China or India, which
would reduce the demand for shipping capacity, thereby resulting
in reduced shipping rates;
the risks and costs to Trinity if the merger is not completed,
including the need to locate another suitable business
combination or arrangement; and
the restrictions on the conduct of Trinitys business prior
to completion of the merger, which may delay or prevent Trinity
from exploiting business opportunities that may arise pending
completion of the merger.
the merger would afford FreeSeas access to not less than
$7,000,000 as a result of the merger, with the possibility to
raise approximately an additional $18,000,000 through the
exercise of the Trinity warrants that would be used by FreeSeas
for working capital and to acquire additional vessels;
publicly traded securities would afford FreeSeas
management, after the consummation of the transaction, the
opportunity to utilize FreeSeas authorized but unissued
securities to attempt to acquire other compatible
businesses; and
this transaction substantially reduces the uncertainty attendant
to FreeSeas own public offering of securities as compared
to attempting to complete an underwritten initial public
offering, and the possibility that any such offering might not
be successfully consummated in view of then prevailing market
conditions.
the Trinity warrants may not be exercised and therefore FreeSeas
would not have access to approximately $18,000,000 from the
exercise of the Trinity warrants, which could adversely affect
FreeSeas business plan and growth strategy;
factors beyond FreeSeas control, such as industry economic
conditions, general economic conditions, terrorism or war, could
have an adverse effect upon the market price of FreeSeas
common stock after the merger;
the additional significant expense and responsibility of being a
U.S. public company, including Sarbanes-Oxley Act
compliance, corporate governance issues, SEC reporting
requirements, and stock exchange listing requirements;
the necessity of ongoing direct communication with the
investment community, which is time consuming and may detract
from executive time that would otherwise be devoted to business
operations; and
the risk that the Trinity Class B stockholders may not
approve the merger and FreeSeas would have incurred significant
legal, accounting and other expenses in connection the proposed
transaction.
the Merger Agreement has been duly approved by the requisite
stockholders of Trinity and the FreeSeas Shareholders;
following the merger, FreeSeas will continue in the same
business as it conducted prior to the merger;
the Trinity stockholders will receive no consideration pursuant
to the merger other than FreeSeas shares and FreeSeas Exchange
Securities;
there is no plan or intention on the part of management of
FreeSeas to make any cash distributions to its shareholders
within the twelve (12) month period following the effective
time of the merger;
after the merger, the management of FreeSeas plans and intends
to use all of the Trinitys assets in furtherance of
FreeSeas historic business (whether directly or through a
member of FreeSeas qualified group as defined
in Treasury Regulation § 1.368-1(d)(4)(ii));
the Trinity stockholders will pay all of their own expenses in
connection with the merger;
the Trinity liabilities to be assumed by FreeSeas by reason of
the merger have been incurred in the ordinary course of business
of Trinity or incurred by Trinity solely and directly in
connection with the merger;
there is no plan or intention on the part of the Trinity
stockholders to (a) redeem, or (b) sell, exchange,
transfer by gift, or otherwise dispose of, to persons related
(as defined in Treasury Regulation §1.368-1(e)(3)) to
FreeSeas, more than fifty percent (50%) of the FreeSeas shares
received in the merger;
the aggregate value of the FreeSeas shares received by the
Trinity stockholders will be equal to the amount of cash held by
Trinity at the effective time of the merger;
the aggregate value of the FreeSeas Exchange Securities received
by the Trinity stockholders will be equal to the aggregate value
of the Trinity warrants and options outstanding at the effective
time of the merger;
there are no pending or threatened claims or assessments that
have been asserted by or against Trinity, other than any
disclosed and reflected in the balance sheet or financial
statements of Trinity; and
there are no unasserted claims or assessments against Trinity
that are probable of assertion.
Conduct of Business Prior to Effective Time of the
Merger
each of Trinity and FreeSeas shall conduct its business in the
ordinary and usual course of business and consistent with past
practice;
each of Trinity and FreeSeas shall not (i) split, combine
or reclassify its outstanding capital stock or declare, set
aside or pay any dividend or distribution payable in cash,
stock, property or otherwise, (ii) spin-off any assets or
businesses, (iii) engage in any transaction for the purpose
of effecting a recapitalization, or (iv) engage in any
transaction or series of related transactions which has a
similar effect to any of the foregoing;
each of Trinity and FreeSeas shall not issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or any options, warrants or rights of any
kind to acquire, any shares of its capital stock of any class or
any debt or equity securities convertible into or exchangeable
for such capital stock or amend or modify the terms and
conditions of any of the foregoing, provided, however, that it
may issue shares upon exercise of outstanding options, warrants
or stock purchase rights;
each of Trinity and FreeSeas shall not (i) redeem,
purchase, acquire or offer to purchase or acquire any shares of
its capital stock, other than as required by the governing terms
of such securities, (ii) take or fail to take any action
which action or failure to take action would cause it or its
stockholders (except to the extent that any stockholders receive
cash in lieu of fractional shares) to recognize gain or loss for
tax purposes as a result of the consummation of the merger,
(iii) make
any acquisition of any material assets (except in the ordinary
course of business) or businesses, (iv) sell any material
assets (except in the ordinary course of business) or
businesses, or (v) enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
each of Trinity and FreeSeas shall use reasonable efforts to
preserve intact its business organization and goodwill, keep
available the services of its present officers and key
employees, and preserve the goodwill and business relationships
with suppliers, distributors, customers, and others having
business relationships with it, and not engage in any action,
directly or indirectly, with the intent to impact adversely the
transactions contemplated by the Merger Agreement;
each of Trinity and FreeSeas shall confer on a regular basis
with one or more representatives of the other to report on
material operational matters and the general status of ongoing
operations; and
each of Trinity and FreeSeas shall file with the SEC all forms,
statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it
pursuant to the Exchange Act.
No Solicitation of Transactions
Access to Information
FreeSeas Registration Statement
SEC Filings by Trinity
Trinity Class B Stockholders Approval
Stock Exchange Listing/ Exchange Act Listing
Trinity Warrants and Trinity Options
Agreement to Cooperate
Public Statements
Corrections to the Proxy Statement and the FreeSeas
Registration Statement
Post-Closing Board Observation Rights
Employment Agreements
Assignment by FreeSeas Shareholders
Conditions to Each Partys Obligations to Effect the
Merger
Trinity shall have obtained approval of its Class B
stockholders;
The FreeSeas Registration Statement shall have become effective
under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order;
The FreeSeas shares issuable to Trinitys stockholders, the
FreeSeas shares issued to the FreeSeas Shareholders, the
FreeSeas Exchange Securities and the stock issuable upon
exercise thereof shall have been approved for the Stock Exchange
Listing and the Exchange Act Listing, subject to any notice of
issuance or similar requirement;
No preliminary or permanent injunction or other order or decree
by any governmental authority which prevents or materially
burdens the consummation of the merger shall have been issued
and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted);
No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any governmental
authority, which would prevent or materially burden the
consummation of the merger; and
All consents, orders and approvals legally required for the
consummation of the merger and the transactions contemplated
hereby shall have been obtained and be in effect at the
effective time of the merger without any material limitations or
conditions.
Conditions to Obligations of FreeSeas and the FreeSeas
Shareholders to Effect the Merger
Trinity shall have performed in all material respects its
agreements contained in the Merger Agreement required to be
performed on or prior to the closing date and the
representations and warranties of Trinity contained in the
Merger Agreement shall be true and correct in all material
respects (except for those representations and warranties which
are themselves limited by a reference to materiality, which
shall be true and correct in all respects other than as
modified) on
and as of (i) the date made and (ii) the closing date
(in each case except in the case of representations and
warranties expressly made solely with reference to a particular
date which shall be true and correct in all material respects as
of such date) and FreeSeas and the FreeSeas Shareholders shall
have received a certificate of the President of Trinity to that
effect;
FreeSeas shall have received an opinion from Seward &
Kissel LLP, counsel to Trinity, in form and substance reasonably
satisfactory to FreeSeas and its counsel, which shall include,
among other things, an opinion that there will not be any
recognition of gain to Trinity or Trinity stockholders upon
consummation of the merger;
FreeSeas shall have received a comfort letter from
J.H. Cohn LLP, independent public accountants for Trinity, with
respect to certain financial statements of Trinity and other
related financial information included in this joint proxy
statement/ prospectus in customary form;
Since the date of the Merger Agreement, there shall not have
been any material adverse effect with respect to Trinity, the
likelihood of which was not previously disclosed to FreeSeas and
the FreeSeas Shareholders by Trinity or contemplated by the
Merger Agreement and Trinity shall have engaged in no business
activity since the date of its incorporation other than
conducting a public offering of its securities and, thereafter,
seeking to effect a merger or similar business combination with
an operating business;
FreeSeas shall have received a certificate from the corporate
Secretary of Trinity, together with a certified copy of the
resolutions duly authorized by Trinitys Board of Directors
authorizing the merger and, if applicable, the transactions
contemplated by the Merger Agreement;
FreeSeas shall have received a certificate of good standing for
Trinity from the Secretary of State of the State of Delaware
dated as of a date that is within five days of the closing date;
Trinity shall have furnished to the FreeSeas Shareholders such
additional certificates and other customary closing documents as
FreeSeas and the FreeSeas Shareholders may have reasonably
requested;
At the effective time of the merger, Trinity shall have
approximately $7,400,000 but not less than $7,000,000 in cash or
cash equivalents after giving effect to (a) the payment or
accrual on or prior to the effective time of the merger of all
expenses incurred by Trinity, including, but not limited to, the
fees and expenses of Trinitys attorneys, accountants and
investment bankers (including HCFP), and (b) any payments
to be made to dissenting Trinity stockholders, in connection
with the transactions contemplated by the Merger Agreement;
At closing, the Trinity capitalization shall be unchanged from
that set forth in the Merger Agreement (other than to reflect
issuances, if any, of Trinity common stock upon exercises prior
to the effective time of the merger of Trinitys warrants);
FreeSeas and the FreeSeas Shareholders shall have received a
lock-up letter agreement signed by each officer and director of
Trinity, in form and substance satisfactory to FreeSeas, the
FreeSeas Shareholders and Trinity (Lock-Up
Agreements);
FreeSeas and the FreeSeas Shareholders shall have received
written resignations from each of Trinitys directors and
officers and which resignations, by their respective terms,
shall become effective immediately prior to the effective time
of the merger;
Trinity shall have conducted the operation of its business in
material compliance with all applicable laws and all approvals
required of Trinity under applicable law to enable Trinity to
perform its obligations under the Merger Agreement shall have
been obtained; and
All corporate proceedings of Trinity in connection with the
merger and the other transactions contemplated by the Merger
Agreement and all agreements, instruments, certificates, and
other documents delivered to the FreeSeas Shareholders by or on
behalf of Trinity pursuant to the
Merger Agreement shall be reasonably satisfactory to FreeSeas
and the FreeSeas Shareholders and their counsel.
Conditions to Obligations of Trinity to Effect the
Merger
FreeSeas and the FreeSeas Shareholders shall have performed in
all material respects their agreements contained in the Merger
Agreement required to be performed on or prior to the closing
date and the representations and warranties of FreeSeas and the
FreeSeas Shareholders contained in the Merger Agreement shall be
true and correct in all material respects (except for those
representations and warranties which are themselves limited by a
reference to materiality, which shall be true and correct in all
respects, other than as modified) on and as of (i) the date
made and (ii) the closing date (in each case except in the
case of representations and warranties expressly made solely
with reference to a particular date which shall be true and
correct in all material respects as of such date) and Trinity
shall have received a Certificate of each of the FreeSeas
Shareholders and of the President of FreeSeas to that effect;
Trinity shall have received an opinion from Broad and Cassel,
counsel to FreeSeas, in form and substance reasonably
satisfactory to Trinity and its counsel;
Trinity shall have received a comfort letter from
PriceWaterhouseCoopers LLP, independent certified public
accountants for FreeSeas, with respect to certain financial
statements of FreeSeas and other related financial information
included in this joint proxy statement/ prospectus in customary
form;
Trinity shall have received:
(1) A Certificate of Ownership and Encumbrance issued by
the Office of the Maritime Administrator, Republic of the
Marshall Islands, dated not more than five business days prior
to the closing, confirming that FreeSeas Two S.A. is the owner
of the
Free Destiny
free and clear of any lien other than
as disclosed in the Merger Agreement;
(2) A Certificate of Ownership and Encumbrance issued by
the Office of the Maritime Administrator, Republic of the
Marshall Islands, dated not more than five business days prior
to the closing, confirming that FreeSeas Three S.A. is the owner
of the
Free Envoy
free and clear of any lien other than
as disclosed in the Merger Agreement;
(3) A certificate by Lloyds dated not more than ten
business days prior to the closing, to the effect that the
Free Destiny
is in class without overdue recommendation;
(4) A certificate by the Korean Register of Shipping dated
not more than ten business days prior to the closing, to the
effect that the
Free Envoy
is in class without overdue
recommendation; and
(5) Facsimile advice, dated the closing date, from one or
more protection and indemnity insurance clubs to the effect that
each of FreeSeas vessels is or are entered therein, as
applicable, as of that date.
At closing, FreeSeas capitalization shall be unchanged
from that set forth in the Merger Agreement;
Trinity shall have received a certificate of the corporate
Secretary of FreeSeas together with a certified copy of the
resolutions duly authorized by the Board of Directors and
FreeSeas Shareholders authorizing the merger and the
transactions contemplated by the Merger Agreement;
Trinity shall have received a certificate of good standing for
FreeSeas from the Registrar of Corporations of the Republic of
the Marshall Islands dated as of a date that is within five days
of the closing date;
FreeSeas and the FreeSeas Shareholders shall have furnished to
Trinity such additional certificates and other customary closing
documents as Trinity may have reasonably requested;
Since the date of the Merger Agreement there shall not have been
any material adverse effect with respect to FreeSeas, the
likelihood of which was not previously disclosed to Trinity by
FreeSeas and the FreeSeas Shareholders;
Trinity shall have received Lock-Up Agreements from each
FreeSeas Shareholder;
Each of George D. Gourdomichalis, Efstathios D. Gourdomichalis
and Ion G. Varouxakis shall have executed employment agreements
with FreeSeas;
FreeSeas, V Capital and G Bros (or their permitted transferees
or assignees under the Merger Agreement), FreeSeas Two S.A and
FreeSeas Three S.A. shall have each amended their respective
Articles of Incorporation and By-laws on terms reasonably
satisfactory to Trinity, including, but not limited to, removing
any ability of such company to issue bearer shares, and such
documents shall be in full force and effect;
FreeSeas shall be the sole registered and beneficial shareholder
of Adventure Two S.A. and Adventure Three S.A.;
V Capital and G Bros (or their permitted transferees or
assignees under the Merger Agreement) shall be the sole
registered and beneficial shareholders of FreeSeas;
One or more of George D. Gourdomichalis, Efstathios D.
Gourdomichalis and Ion G. Varouxakis shall be the sole
registered and beneficial shareholders of V Capital and G Bros
(or their permitted transferees or assignees under the Merger
Agreement); and
All corporate proceedings of FreeSeas and the FreeSeas
Shareholders in connection with the merger and the other
transactions contemplated by the Merger Agreement and all
agreements, instruments, certificates and other documents
delivered to Trinity by or on behalf of FreeSeas and the
FreeSeas Shareholders pursuant to the Merger Agreement shall be
in substantially the form called for under the Merger Agreement
or otherwise reasonably satisfactory to Trinity and its counsel.
by mutual consent in writing of Trinity and the FreeSeas
Shareholders;
unilaterally upon written notice by Trinity to the FreeSeas
Shareholders upon the occurrence of a material adverse effect
with respect to FreeSeas, the likelihood of which was not
previously disclosed to Trinity in writing by the FreeSeas
Shareholders prior to the date of the Merger Agreement;
unilaterally upon written notice by the FreeSeas Shareholders to
Trinity upon the occurrence of a material adverse effect with
respect to Trinity, the likelihood of which was not previously
disclosed to the FreeSeas Shareholders in writing by Trinity
prior to the date of the Merger Agreement;
unilaterally upon written notice by Trinity to the FreeSeas
Shareholders in the event a material breach of any material
representation or warranty of FreeSeas or the FreeSeas
Shareholders contained in the Merger Agreement (unless such
breach shall have been cured within ten days after the giving of
such notice by Trinity), or the willful failure of FreeSeas or
the FreeSeas Shareholders to comply with or satisfy any material
covenant or condition of FreeSeas or the FreeSeas Shareholders
contained in the Merger Agreement;
unilaterally upon written notice by the FreeSeas Shareholders to
Trinity in the event of a material breach of any material
representation or warranty of Trinity contained in the Merger
Agreement (unless such breach shall have been cured by Trinity
within ten days after the giving of such notice
by the FreeSeas Shareholders), or Trinitys willful failure
to comply with or satisfy any material covenant or condition of
Trinity contained in the Merger Agreement, or if Trinity fails
to obtain the approval of its Class B stockholders; or
unilaterally upon written notice by either Trinity or the
FreeSeas Shareholders to the other if the merger is not
consummated for any reason by the close of business on
July 31, 2005.
General
Property
Employees
Competition
Trinitys obligation to seek Class B stockholder
approval of a business combination may delay the completion of a
transaction;
Trinitys obligation to convert into cash shares of
Class B common stock held by its Class B stockholders
in certain instances may reduce the resources available to
Trinity for a business combination; and
Trinitys outstanding warrants, and the future dilution
they potentially represent, may not be viewed favorably by
certain target businesses.
Legal Proceedings
Management
Name
Age
Position
62
President, Treasurer and Director
55
Chairman and Secretary
43
Director
48
Director
Executive Compensation
Trinity Principal Stockholders
Common Stock(1)
Class B Common Stock(1)
Number of
Number of
Shares of
Shares of
Class B
Common Stock
Common Stock
Beneficially
Ownership
Beneficially
Ownership
Name and Address of Beneficial Owner
Owned
Percentage
Owned
Percentage
146,700
9.8
%
48,000
16.7
100,000
6.7
%
90,000
6.0
%
12,050
4.2
50
*
12,100
4.2
*
Represents beneficial ownership of less than 1%.
(1)
Does not include shares of common stock issuable upon exercise
of Class W Warrants and Class Z Warrants which are
beneficially owned by each of the persons named in the above
table but which are not exercisable until the later of
(i) July 29, 2005 or (ii) the earlier of
(a) the consummation by
Trinity of a business combination or (b) the distribution
of Trinitys trust fund to its Class B stockholders.
(2)
Based on information contained in a Schedule 13G filed by
Edward S. Gutman in March 2005, Mr. Gutman has sole power
to vote or to direct the vote, and sole power to dispose or
direct the disposition, of 146,700 shares of Trinity
Class B common stock. Such Schedule 13G states that
21,000 of such shares are held by the Gutman Family Foundation,
of which Mr. Gutman is the President.
(3)
Based on information contained in two Schedule 13Gs
filed by Jack Silver in February 2005, Mr. Silver has sole
power to vote or to direct the vote, and sole power to dispose
or direct the disposition, of 48,000 shares of common stock
and 100,000 shares of Trinity Class B common stock.
Such Schedule 13G states that all of such shares are held
by the Sherleigh Associates Profit Sharing Plan, a trust of
which Mr. Silver is the trustee.
(4)
Based on information contained in a Schedule 13G filed by
Ramapo Trust in October 2004, Ramapo Trust has sole power to
vote or to direct the vote, and sole power to dispose or direct
the disposition, of 45,000 Series B Units, which consists
of 90,000 shares of Class B common stock, Class W
Warrants to purchase 45,000 shares of common stock and
Class Z Warrants to purchase 45,000 shares of
common stock.
(5)
Does not include 3,000 shares of common stock owned by the
wife of Mr. Burstein and 1,000 shares of common stock
owned by the daughter of Mr. Burstein, of which
Mr. Burstein disclaims beneficial ownership.
Certain Related Transactions of Trinity
Number of
Number of
Number of
Shares of
Class W
Class Z
Name
Common Stock
Warrants
Warrants
50
170,000
(1)
170,000
(1)
50
170,000
170,000
11,250
11,250
11,250
11,250
(1)
Includes 90,000 Class W Warrants and 90,000 Class Z
Warrants held by Mr. Bursteins affiliate, Unity. In
October 2004, Unity distributed an aggregate of 82,499 of such
Class W Warrants and 82,499 of such Class Z Warrants
to its stockholders (including 15,450 Class W Warrants and
15,450 Class Z Warrants to Mr. Burstein), leaving
Unity the beneficial owner of 7,501 Class W Warrants and
7,501 Class Z Warrants.
Recent Events
General
Operations
Liquidity and Capital Resources
Off-Balance Sheet Arrangements
Contractual Obligations and Commitments
Payment Due by Period
Less Than
More Than
Contractual Obligations
Total
1 Year
1-3 Years
3-5 Years
5 Years
$
52,000
$
48,000
$
4,000
$
$
$
52,000
$
48,000
$
4,000
$
$
(1)
Trinity is obligated, having commenced July 29, 2004, to
pay to Unity, an affiliate of Lawrence Burstein, a stockholder,
director and Trinitys President and Treasurer, a monthly
fee of $4,000 for office and secretarial services.
Critical Accounting Policies
Quantitative and Qualitative Disclosures About Market
Risk
Controls and Procedures
General
Corporate Structure
Owner
Name
Free Destiny
Free Envoy
FreeSeas Fleet
Vessel
Dwt
Country Built
Year Built
Vessel Type
25,240
Bulgaria
1982
Handysize
26,318
Japan
1984
Handysize
(1)
Subject to period time charter ending between August and October
2005 at a gross rate of $10,530 per day, plus 25% profit
sharing with charterers.
(2)
Subject to period time charter ending between September and
November 2005 at a gross rate of $10,530 per day, plus 25%
profit sharing with charterers.
Pending Acquisition of Vessel
Competitive Strengths
Experienced Management Team.
FreeSeas management
team has significant experience in operating drybulk carriers
and expertise in all aspects of commercial, technical,
operational and financial areas of its business.
Strong Customer Relationships.
FreeSeas, through Free
Bulkers, its ship management company, has many long-established
customer relationships, and FreeSeas believes it is well
regarded within the international shipping community.
Profitable Operations to Date.
Since its inception,
FreeSeas principals have operated its vessels profitably
by carefully selecting secondhand vessels, competitively
commissioning and actively supervising cost-efficient shipyards
to perform repair, reconditioning and systems upgrading work,
together with a proactive preventive maintenance program both
ashore and at sea, and employing professional, well-trained
masters, officers and crews. FreeSeas believes that this
combination allows it to minimize off-hire periods, effectively
manage insurance costs, and control overall operating expenses.
Business Strategy
Vessel Employment
Customers
Management of the Fleet
Crewing and Employees
Loans for Vessels
Property
Competition
Environmental and Other Regulations
Environmental Regulation International Maritime
Organization (IMO).
Environmental Regulations The United States Oil
Pollution Act of 1990.
Vessel Security Regulations
on-board installation of automatic information systems
(AIS), to enhance vessel-to-vessel and
vessel-to-shore communications;
on-board installation of ship security alert systems;
the development of vessel security plans; and
compliance with flag state security certification requirements.
Inspection by Classification Societies
Risk of Loss and Liability Insurance
General
Hull and Machinery Insurance
Protection and Indemnity Insurance
Legal Proceedings
Exchange Controls
Description of Management of FreeSeas
Name
Age
Position
38
Chairman and President
34
Chief Executive Officer and Secretary
33
Chief Financial Officer and Treasurer
Executive Compensation
FreeSeas Principal Shareholders
each person known by FreeSeas to be the beneficial owner of more
than 5% of FreeSeas shares;
each of FreeSeas officers and directors; and
all FreeSeas officers and directors as a group.
Number of
Name
Shares
Percent
(1)
1,837,500
(2)
28.56
%
1,629,417
(3)
25.26
%
1,483,084
(4)
23.12
%
4,950,001
73.52
%
(1)
For purposes of computing the percentage of outstanding shares
of common stock held by each person named above, any shares that
the named person has the right to acquire within 60 days
under warrants or options are deemed to be outstanding for that
person, but are not deemed to be outstanding when computing the
percentage ownership of any other person. These percentages are
based on 6,282,600 shares of FreeSeas common stock
that are estimated to be outstanding immediately following the
merger.
(2)
Reflects 1,687,500 shares of common stock and
66,667 shares issuable upon the exercise of warrants issued
to The Midas Touch S.A., a company wholly owned by Ion G.
Varouxakis; and 83,333 shares issuable upon exercise of
immediately exercisable options granted to Mr. Varouxakis
under his employment agreement with FreeSeas.
Mr. Varouxakis was granted a total of 250,000 options,
1
/
3
of which vested immediately,
1
/
3
of which vests after one year and the remaining
1
/
3
of which vests after two years. The options are exercisable at a
price of $5.00 per share.
(3)
Reflects 1,462,750 shares of common stock and
66,667 shares issuable upon the exercise of warrants issued
to Alastor Investments S.A., a company wholly owned by Alastor
Foundation, a foundation of which George D. Gourdomichalis, is
the sole beneficiary; and 100,000 shares issuable upon
exercise of immediately exercisable options granted to
Mr. Gourdomichalis under his employment agreement with
FreeSeas. Mr. Gourdomichalis was granted a total of 300,000
options,
1
/
3
of which vested immediately,
1
/
3
of which vests after one year and the remaining
1
/
3
of which vests after two years. The options are exercisable at a
price of $5.00 per share.
(4)
Reflects 1,349,750 shares of common stock and
66,666 shares issuable upon the exercise of warrants issued
to N.Y. Holdings, a company wholly owned by Efstathios D.
Gourdomichalis and 66,667 shares issuable upon exercise of
immediately exercisable options granted to
Mr. Gourdomichalis under his employment agreement with
FreeSeas. Mr. Gourdomichalis was granted a total of 200,000
options,
1
/
3
of which vested immediately,
1
/
3
of which vests after one year and the remaining
1
/
3
of which vests after two years. The options are exercisable at a
price of $5.00 per share.
Employment Agreements
Certain Related Transactions of FreeSeas
Owned days.
FreeSeas defines owned days (also
referred to as calendar days) as the total number of
days in a period during which each vessel in its fleet was in
its possession, including offhire days associated with major
repairs, drydockings or special or intermediate surveys. Owned
days are an indicator of the size of the fleet over a period and
affect both the amount of revenues and the amount of expenses
that FreeSeas records during that period.
Income days.
FreeSeas defines income days as
the total number of days in a period during which each vessel in
its fleet was in its possession, net of offhire days associated
with major repairs,
drydockings or special or intermediate surveys. The shipping
industry uses income days (also referred to as
voyage or available days) to measure the
number of days in a period during which vessels actually
generate revenues.
Fleet utilization.
FreeSeas calculates fleet utilization
by dividing the number of its voyage days during a period by the
number of its calendar days during that period. The shipping
industry uses fleet utilization to measure a companys
efficiency in finding suitable employment for its vessels and
minimizing the amount of days that its vessels are offhire for
reasons such as scheduled repairs, vessel upgrades or
drydockings and other surveys.
Spot charter rates.
Spot charter rates are volatile and
fluctuate on a seasonal and year-to-year basis. The fluctuations
are caused by imbalances in the availability of cargoes for
shipment and the number of vessels available at any given time
to transport these cargoes.
Loans
Related
Year Ended December 31,
A
B
Parties
Total
$
1,700,000
$
1,700,000
$
$
3,400,000
1,541,667
1,700,000
1,000,000
4,241,667
1,066,668
2,175,000
1,000,000
4,241,668
266,665
1,566,000
266,665
$
4,575,000
$
5,575,000
$
3,366,000
$
13,716,000
Interest Rate Fluctuation
Year
Amount
$
39,500
$
22,300
$
9,200
$
650
Year
Amount
$
49,500
$
32,000
$
15,500
Marshall Islands
Delaware
Shareholder Meetings
May be held at such time or place as designated in
the certificate of incorporation or the bylaws, or if not so
designated, as determined by the board of directors
May be held within or outside Delaware
Notice:
Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of
the meeting shall be given which shall state the place, if any,
date and hour of the meeting, and the means of remote
communication, if any by which stockholders may be deemed to be
present and vote at such meeting
Written notice shall be given not less
than 10 nor more than 60 days before the date of the meeting
Marshall Islands
Delaware
Shareholders Voting Rights
Stockholders may act by written consent to elect
directors
Any person authorized to vote may authorize another
person or persons to act for him by proxy
For non-stock corporations, certificate of
incorporation or bylaws may specify the number of members
necessary to constitute a quorum. In the absence of this,
one-third of the members shall constitute a quorum
For stock corporations, certificate of incorporation
or bylaws may specify the number of members necessary to
constitute a quorum but in no event shall a quorum consist of
less than one-third of the shares entitled to vote at the
meeting. In the absence of such specifications, a majority of
shares entitled to vote at the meeting shall constitute a quorum
The certificate of incorporation may provide for
cumulative voting
Directors
Board must consist of at least one member
Number of board members shall be fixed by the
bylaws, unless the certificate of incorporation fixes the number
of directors, in which case a change in the number shall be made
only by amendment of the certificate
Dissenters Rights of Appraisal
Appraisal rights shall be available for the shares
of any class or series of stock of a corporation in a merger or
consolidation
Marshall Islands
Delaware
Shareholders Derivative Actions
In any derivative suit instituted by a stockholder
of a corporation, the plaintiff must be a stockholder of the
corporation at the time of the transaction of which he complains
or such stockholders stock must have thereafter devolved
upon such stockholder by operation of law
Shares of Common Stock
Beneficially Owned
Shares of Common Stock
After the Merger and
Beneficially Owned
Prior to the Offering
After the Offering
Number of
Number of
Shares
Number of
Shares
Beneficially
Percent of
Shares Being
Beneficially
Percent of
Selling Stockholder
Owned
Class(1)
Offered
Owned(2)
Class(1)
1,837,500
(3)
28.56
%
1,837,500
83,333
1.31
%
1,629,417
(4)
25.26
%
1,629,417
100,000
1.52
%
1,483,084
(5)
23.12
%
1,483,084
66,667
1.05
%
412,050
(6)
6.17
%
412,050
(6)
0
*
340,050
(7)
5.13
%
340,050
(7)
0
*
22,500
(8)
*
22,500
(8)
0
*
22,500
(9)
*
22,500
(9)
0
*
*
Less than one percent
(1)
Based on 6,282,600 shares of FreeSeas common stock that
will be issued and outstanding immediately following the merger
assuming each Trinity stockholder participates in the merger.
For purposes of calculating the percentage ownership, any shares
that each selling shareholder has the right to acquire within
60 days under warrants or options have been included in the
total number of shares outstanding for that person, in
accordance with Rule 13d-3 under the Securities and
Exchange Act of 1934, as amended.
(2)
Assumes that the selling shareholders sell all of their shares
of common stock beneficially owned by each selling shareholder
immediately following the merger described in this joint proxy
statement/ prospectus, and reflects the vesting of an additional
1
/
3
of the shares issuable upon exercise of options held by each
selling shareholder, as described in the footnotes below.
(3)
Reflects 1,687,500 shares of common stock and
66,667 shares issuable upon the exercise of warrants issued
to The Midas Touch S.A., a company wholly
owned by Ion G. Varouxakis; and 83,333 shares issuable upon
exercise of immediately exercisable options granted to
Mr. Varouxakis under his employment agreement with
FreeSeas. Mr. Varouxakis was granted a total of 250,000
options,
1
/
3
of which vested immediately,
1
/
3
of which vests after one year and the remaining
1
/
3
of which vests after two years. The options are exercisable at a
price of $5.00 per share.
(4)
Reflects 1,462,750 shares of common stock and
66,667 shares issuable upon the exercise of warrants issued
to Alastor Investments S.A., a company wholly owned
by Alastor Foundation, a foundation of which George D.
Gourdomichalis, is the sole beneficiary; and 100,000 shares
issuable upon exercise of immediately exercisable options
granted to Mr. Gourdomichalis under his employment agreement
with FreeSeas. Mr. Gourdomichalis was granted a total of
300,000 options,
1
/
3
of which vested immediately,
1
/
3
of which vests after one year and the remaining
1
/
3
of which vests after two years. The options are exercisable at a
price of $5.00 per share.
(5)
Reflects 1,349,750 shares of common stock and
66,667 shares issuable upon the exercise of warrants issued
to N.Y. Holdings, a company wholly owned by
Efstathios D. Gourdomichalis and 66,667 shares issuable
upon exercise of immediately exercisable options granted to
Mr. Gourdomichalis under his employment agreement with
FreeSeas. Mr. Gourdomichalis was granted a total of 200,000
options,
1
/
3
of which vested immediately,
1
/
3
of which vests after one year and the remaining
1
/
3
of which vests after two years. The options are exercisable at a
price of $5.00 per share.
(6)
Reflects 12,050 shares of common stock and
400,000 shares issuable upon the exercise of Class W
and Class Z warrants held by Mr. Burstein. Includes
90,000 Class W Warrants and 90,000 Class Z Warrants
held by Mr. Bursteins affiliate, Unity. In October
2004, Unity distributed an aggregate of 82,499 of such
Class W Warrants and 82,499 of such Class Z Warrants
to its stockholders (including 15,450 Class W Warrants and
15,450 Class Z Warrants to Mr. Burstein), leaving
Unity the beneficial owner of 7,501 Class W Warrants and
7,501 Class Z Warrants. Does not reflect 4,000 shares of
common stock and 20,000 shares issuable upon the exercise of
Class W and Class Z warrants held by Mr.
Bursteins wife and daughter, of which Mr. Burstein
disclaims beneficial ownership.
(7)
Reflects 50 shares of common stock and 340,000 shares
issuable upon the exercise of Class W and Class Z
warrants held by Mr. Scibelli.
(8)
Reflects 22,500 shares of common stock issuable upon the
exercise of Class W and Class Z warrants held by
Mr. Buckel.
(9)
Reflects 22,500 shares of common stock issuable upon the
exercise of Class W and Class Z warrants held by
Mr. Kesten.
a block trade in which a broker-dealer may resell a portion of
the block, as principal, in order to facilitate the transaction;
purchases by a broker-dealer, as principal, and resale by the
broker-dealer for its account;
ordinary brokerage transactions and transactions in which a
broker solicits purchasers; or
an exchange distribution in accordance with the rules of the
applicable exchange.
enter into transactions involving short sales of the shares by
broker-dealers;
sell shares short themselves and redeliver such shares to close
out their short positions;
enter into option or other types of transactions that require
the selling shareholder to deliver shares to a broker-dealer,
who will then resell or transfer the shares under this
prospectus; or
loan or pledge the shares to a broker-dealer, who may sell the
loaned shares or, in the event of default, sell the pledged
shares.
agree to indemnify any broker-dealer or agent against certain
liabilities related to the selling of the shares, including
liabilities arising under the Securities Act;
transfer its shares in other ways not involving market makers or
established trading markets, including directly by gift,
distribution, privately negotiated transaction or other transfer;
sell its shares pursuant to Rule 144 under the Securities
Act rather than pursuant to this prospectus, if the shares are
eligible for such sale and the transaction meets the
requirements of Rule 144; or
any combination of any of the foregoing methods of sale.
F-2
F-3
F-4
F-5
F-6
F-7
ASSETS
$
484,802
7,601,236
23,874
8,109,912
$
8,109,912
LIABILITIES AND STOCKHOLDERS EQUITY
$
72,836
72,836
1,519,490
29
120
6,602,764
(86,477
)
1,150
6,517,586
$
8,109,912
$
75,948
15,911
47,632
(139,491
)
53,014
$
(86,477
)
1,020,615
$
(0.08
)
Common Stock, Class B
Accumulated
Common Stock
Additional
Other
Paid-In
Accumulated
Comprehensive
Shares
Amount
Shares
Amount
Capital
Deficit
Income
Total
$
$
$
$
$
$
100
500
500
36,250
36,250
287,500
29
1,196,149
120
6,566,014
6,566,163
(86,477
)
(86,477
)
1,150
1,150
(85,327
)
287,600
$
29
1,196,149
$
120
$
6,602,764
$
(86,477
)
$
1,150
$
6,517,586
$
(86,477
)
(50,336
)
(23,874
)
72,836
(87,851
)
(7,549,750
)
(7,549,750
)
36,750
46,000
(46,000
)
1,509,198
6,576,455
8,122,403
484,802
$
484,802
Preferred Stock
Common Stock and Class B Common Stock
Warrants
$
29,100
5,500
(34,600
)
$
F-13
F-14
F-15
F-16
F-17
F-18
December 31,
2004
$
2,830
(802
)
(872
)
(109
)
(180
)
(127
)
(34
)
706
(240
)
4
(236
)
$
470
December 31,
2004
$
470
872
127
66
(641
)
(295
)
(41
)
(246
)
415
116
284
119
1,246
(17,060
)
(17,060
)
11,000
3,675
(850
)
(568
)
37
2,971
600
(190
)
16,675
861
861
77
$
55
Additional
Common
Common
Paid-in
Retained
Shares
Shares $
Capital
Earnings
Total
4,500,000
2,916
2,916
470
4,500,000
2,916
3,386
1
Basis of Presentation and General Information
Company
FreeSeas Inc.
Adventure Two S.A.
Adventure Three S.A.
The financial statements reflect the results of the operations
of the Company and its subsidiaries from inception. The two bulk
carriers were purchased by vessel-owning subsidiaries on
August 4, 2004 and September 29, 2004, respectively
from unrelated third parties. The vessels were acquired without
existing charters. Any inter-company balances have been
eliminated on consolidation.
2
Significant Accounting Policies
Recent Accounting Developments:
3
Fixed Assets
Accumulated
Net Book
Vessel Cost
Depreciation
Value
17,060
(872
)
16,188
17,060
(872
)
16,188
4
Deferred Charges
Special Survey
Financing
Dry-Docking
Cost
Costs
Total
340
301
190
831
(80
)
(29
)
(18
)
(127
)
260
272
172
704
5
Accounts payable
December 31,
2004
281
117
17
415
6
Accrued liabilities
December 31,
2004
34
62
20
116
7
Long-term debt
Balance
Current
Long-Term
December 31,
Loan
Portion
Portion
2004
1,700
2,875
4,575
1,700
3,875
5,575
3,400
6,750
10,150
Loan
Lender
Vessel
Repayment terms
A
Corner Banca S.A.
M/V FREE DESTINY
Seven quarterly installments of US$425, and six quarterly
installments of US$267.
Interest rate at 1.75% above LIBOR.
B
Hollandsche Bank
Unie N.V.
M/V FREE ENVOY
Eleven quarterly installments of US$425 and a balloon payment of
US$900.
Interest rate at 2% above LIBOR.
Dec. 31,
Year
2004
3,400
3,242
3,242
266
10,150
8
Loans from shareholders
3,566
(338
)
3,228
Year
December 31, 2004
3,566
3,566
9
Related party transactions
(a)
Purchases of services
(b)
Due to management company
December 31,
2004
119
(c)
Due from other related party
December 31,
2004
246
(d)
Shareholders advance
10
Taxes
11
Financial instruments
12
Subsequent events
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of
§ 251 of this title.
(2) Notwithstanding paragraph (1) of this
subsection, appraisal rights under this section shall be
available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 of
this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholders
shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for
appraisal of such stockholders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholders
shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to
§ 228 or § 253 of this title, then either a
constituent corporation before the effective date of the merger
or consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders
of any class or series of stock of such constituent corporation
who are entitled to appraisal rights of the approval of the
merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holders shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective
date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice
is given prior to the effective date, the record date shall be
the close of business on the day next preceding the day on which
the notice is given.
(1) Approving an Agreement and Plan of Merger, dated as of
March 24, 2005, by and between Trinity, Adventure Holdings,
S.A.
and ,
pursuant to which Trinity will merge with and into Adventure, as
more particularly described in the enclosed joint proxy
statement/ prospectus.
FOR
ABSTAIN
AGAINST
o
o
Signature
Print Name:
Signature if held jointly
Print Name:
Name of
Entity:
Title/
Capacity:
2.1
Agreement and Plan of Merger dated as of March 24, 2005 by and
among Adventure Holdings, S.A., the Shareholders of Adventure
Holdings S.A. (now known as FreeSeas Inc.) and Trinity Partners
Acquisition Company
Inc.
(1)
2.2
Instrument of Joinder to Merger Agreement by Alastor Investments
S.A.
(2)
2.3
Instrument of Joinder to Merger Agreement by N.Y. Holdings
S.A.
(2)
2.4
Instrument of Joinder to Merger Agreement by The Midas
Touch
S.A.
(2)
3.1
Amended and Restated Articles of Incorporation of FreeSeas Inc.
(formerly known as Adventure Holdings
S.A.)
(1)
3.2
Amended and Restated By-Laws of FreeSeas Inc. (formerly known as
Adventure Holdings
S.A.)
(1)
4.1
Specimen Common Stock
Certificate
(2)
4.2
Form of Class A
Warrant
(2)
4.3
Form of Class W
Warrant
(2)
4.4
Form of Class Z
Warrant
(2)
4.5
Form of Management Stock Option
Agreement
(2)
5.1
Opinion of Reeder & Simpson P.C., Marshall Islands Counsel
to the Registrant, as to the validity of the shares of Common
Stock
(1)
8.1
Opinion of Seward & Kissel LLP, as to certain tax matters
(2)
10.1
Employment Agreement between George D. Gourdomichalis and
FreeSeas
Inc.
(2)
10.2
Employment Agreement between Ion G. Varouxakis and FreeSeas
Inc.
(2)
10.3
Employment Agreement between Efstathios D. Gourdomichalis and
FreeSeas
Inc.
(2)
10.4
2005 Stock Incentive
Plan
(2)
10.5
First Preferred Marshall Islands Vessel Mortgage dated August 4,
2004 by Adventure Two S.A. in favor of Corner Banca
S.A.
(2)
10.6
Deed of Pledge of Shares in Adventure Two S.A. dated August 4,
2004 by Adventure Holdings S.A. (now known as FreeSeas Inc.) to
Corner Banca
S.A.
(2)
10.7
Credit Agreement dated June 24, 2004 between Adventure Three
S.A. and Hollandsche Bank-Unie
N.V.
(2)
10.8
Mortgage dated September 29, 2004 by Adventure Three S.A. in
favor of Hollandsche Bank-Unie
N.V.
(2)
10.9
Deed of Assignment dated September 29, 2004 between Adventure
Three S.A. and Hollandsche Bank-Unie
N.V.
(2)
10.10
Short-Term Loan Agreement in Euros and Optional Currencies dated
July 8, 2004 between Adventure Three S.A. and Hollandsche
Bank-Unie
N.V.
(2)
10.11
Standard Ship Management Agreement dated July 1, 2004 between
Free Bulkers S.A. and Adventure Two
S.A.
(1)
10.12
Standard Ship Management Agreement dated July 1, 2004 between
Free Bulkers S.A. and Adventure Three
S.A.
(1)
10.13
Loan Agreement dated August 2, 2004 among Adventure Holdings
S.A. (now known as FreeSeas Inc.), G Bros S.A., and V Capital
S.A., regarding the M/V Free
Destiny
(2)
10.14
First Amendment to Loan Agreement dated effective as of April
25, 2005 among Adventure Holdings S.A. (now known as FreeSeas
Inc.), G Bros S.A., and V Capital S.A., regarding the M/V
Free
Destiny
(2)
10.15
Loan Agreement dated September 20, 2004 among Adventure Holdings
S.A. (now known as FreeSeas Inc.), G Bros S.A., and V Capital
S.A., regarding the M/V Free
Envoy
(2)
10.16
First Amendment to Loan Agreement dated effective as of April
25, 2005 among Adventure Holdings, S.A. (now known as FreeSeas
Inc.), G Bros S.A., and V Capital S.A., regarding the M/V
Free
Envoy
(2)
10.17
Form of Lock-Up
Agreement
(2)
10.18
Letter Agreement dated May 3, 2005 between Poseidon Capital
Corp. and FreeSeas
Inc.
(2)
21.1
Subsidiaries of the
Registrant
(1)
23.1
Consent of Reeder & Simpson P.C. (included in its opinion
filed as Exhibit
5.1)
(1)
23.2
Consent of Seward & Kissel LLP (included in its opinion
filed as Exhibit
8.1)
(2)
23.3
Consent of PricewaterhouseCoopers
LLP
(1)
23.4
Consent of J. H. Cohn
LLP
(1)
24.1
Power of
Attorney
(3)
99.1
Consent of Dimitrios Germidis, nominee for
director
(2)
99.2
Consent of Focko H. Nauta, nominee for
director
(2)
99.3
Consent of George I. Margaronis, nominee for
director
(2)
99.4
Consent of R.S. Platou Economic
Research
(2)
(1)
Filed herewith.
(2)
To be filed by amendment.
(3)
Included on the signature page of this Registration Statement.
(a) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; and
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
FREESEAS INC.
By:
/s/
George D.
Gourdomichalis
Name: George D. Gourdomichalis
Title: Chairman of the Board and President
Signatures
Title
Date
/s/
George D.
Gourdomichalis
Chairman of the Board of Directors and President
May 11, 2005
/s/
Ion G. Varouxakis
Chief Executive Officer, Secretary and Director (Principal
Executive Officer)
May 11, 2005
/s/
Efstathios D.
Gourdomichalis
Chief Financial Officer and Treasurer (Principal Financial and
Accounting Officer)
May 11, 2005
Authorized U.S. Representative
May 11, 2005
By: A. Jeffry Robinson, P.A
By: /s/
A. Jeffry
Robinson
Title: President
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ADVENTURE HOLDINGS, S.A.
THE SHAREHOLDERS OF ADVENTURE HOLDINGS, S.A.
AND
TRINITY PARTNERS ACQUISITION COMPANY INC.
DATED AS OF MARCH 24, 2005
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered into as of March 24, 2005, by and among Adventure Holdings, S.A., a corporation organized under the laws of the Republic of the Marshall Islands ("ADVENTURE"), V Capital S.A., a corporation organized under the laws of the Republic of the Marshall Islands, ("V CAPITAL"), G Bros S.A., a corporation organized under the laws of the Republic of the Marshall Islands, ("G BROS"), George D. Gourdomichalis ("G. GOURDOMICHALIS"), Stathis D. Gourdomichalis ("S. Gourdomichalis") and Ion G. Varouxakis ("VAROUXAKIS" and together with V Capital, G Bros, G. Gourdomichalis, S. Gourdomichalis and Varouxakis, and together with the permitted successors and assigns under Section 6.13 below, each an "ADVENTURE SHAREHOLDER" and collectively, the "ADVENTURE SHAREHOLDERS") and Trinity Partners Acquisition Company Inc., a corporation organized under the laws of the State of Delaware ("TRINITY").
WITNESSETH:
WHEREAS, the boards of directors of each of Trinity and Adventure believe it is in the best interests of each company and their respective stockholders that Adventure acquire Trinity through the merger of Trinity with and into Adventure (the "MERGER") and, in furtherance thereof, have approved the Merger;
WHEREAS, pursuant to the Merger, among other things, each of the issued and outstanding shares of Trinity Capital Stock (as defined below) shall be converted into the right to receive shares of Adventure, par value $0.001 per share (the "ADVENTURE SHARES");
WHEREAS, the parties intend that the Merger shall constitute a plan of reorganization pursuant to Section 368 of the Code (as defined below);
WHEREAS, Trinity, on the one hand, and Adventure and the Adventure Shareholders, on the other hand, desire to make certain representations, warranties, covenants and other agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS.
Except as otherwise specified herein, the following terms, when used in this Agreement, have the respective meanings set forth below:
"ACTION" means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.
"AFFILIATE" means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such other Person.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the City of New York.
"CODE" means the United States Internal Revenue Code of 1986.
"CONTROL" means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The terms "CONTROLLED" and "CONTROLLING" shall have a correlative meaning.
"DOLLAR" or "$" means the United States Dollar.
"ERISA" means the United States Employee Retirement Income Security Act of 1974, and the rules and regulations promulgated thereunder.
"EXCHANGE ACT" shall mean the United States Securities Exchange Act of 1934.
"EXCHANGE RATIO" means 1.0.
"GAAP" means United States generally accepted accounting principles as in effect, from time to time, consistently applied.
"GOVERNMENTAL AUTHORITY" means any United States (federal, state or local) or foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.
"KNOWLEDGE OF ADVENTURE" OR "KNOWLEDGE" with respect to Adventure means
the knowledge of any of the following: (i) any of the Adventure Shareholders and
(ii) any officer or director of Adventure.
"KNOWLEDGE OF TRINITY" OR "KNOWLEDGE" with respect to Trinity means the knowledge of any officer or director of Trinity.
"LAW" means any United States (federal, state or local) or foreign statute, law, ordinance, regulation, rule, code, order, judgment, injunction or decree.
"LIEN" means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, in respect of such property or asset.
"MATERIAL ADVERSE EFFECT" means with respect to Adventure or Trinity,
as applicable, a material adverse effect on the business, operations,
properties, assets, condition (financial or otherwise) or results of operations
of it and its subsidiaries taken as a whole, or on its ability to consummate the
transactions contemplated hereby except (i) any effect arising from this
Agreement or the transactions contemplated hereby, (ii) any effect applicable
generally to the industries in which Adventure and the Subsidiaries operate and
(iii) general economic or financial effects.
"ORDER" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
"PER SHARE MERGER CONSIDERATION" means for each share of Trinity Capital Stock, the right to receive consideration equal to one (1) fully paid and nonassessable Adventure Share.
"PERSON" means any natural person, general or limited partnership, corporation, limited liability company, firm, association, trust or other legal entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933.
"SUBSIDIARIES" means Adventure Two, S.A. and Adventure Three S.A., each of which is a "Subsidiary" and both of which are Subsidiaries of Adventure.
"TAX" or "TAXES" means all United States (federal, state or local) or foreign income, excise, gross receipts, ad valorem, sales, use, employment, franchise, profits, gains, property, transfer, use, payroll, intangibles or other taxes, fees, stamp taxes, duties, charges, levies or assessments of any kind whatsoever (whether payable directly or by withholding), together with any interest and any penalties, additions to tax or additional amounts imposed by any Tax authority with respect thereto.
"TAX RETURNS" means all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes.
"TRADEMARKS" means all of those trade names, trademarks, service marks, jingles, slogans, logos, trademark and service mark registrations and trademark and service mark applications owned, used, held for use, licensed by or leased by Adventure or the Subsidiaries and the goodwill appurtenant thereto.
"TRINITY CAPITAL STOCK" means collectively, the Trinity Common Stock and the Trinity Class B Common Stock.
1.2 OTHER DEFINED TERMS.
Except as otherwise specified herein, the following terms have the respective meanings as defined in the Sections set forth below:
TERM SECTION ---- ------- Adventure Preamble Adventure Acquisition Transaction 5.2(a) Adventure Exchange Securities 6.6 Adventure Financial Statements 3.13 Adventure Intellectual Property 3.15(a) Adventure Options 3.3 Adventure Registration Statement 6.2 Adventure Shareholders Preamble Adventure Shares Recitals Adventure Software 3.15(b)(iii) Agreement Preamble BCA 2.1 Certificates 2.6 Closing and Closing Date 2.2 Contracts 3.5(b) DGCL 2.1 Dissenting Shares 2.7 Effective Time 2.2 Employment Agreements 6.12 Enforceability Exception 3.4(a) Environmental Laws 3.8(c) Exchange Act Listing 6.5 Exchange Agent 2.9(a) Final Statements 3.13 Free Destiny 3.9(b)(1) Free Envoy 3.9(b)(2) G Bros Preamble G. Gourdomichalis Preamble Indemnified Party 9.3(a) Indemnifying Party 9.3(a) |
Licensed Software 3.15(b)(ii) Lock-Up Agreements 7.2(j) Loss 9.2(a) Merger Recitals Merger Certificate 2.2 Notice of Claim 9.3(a) Owned Software 3.15(b)(i) PFIC 3.21 Proxy Statement 6.2 S. Gourdomichalis Preamble Stock Exchange Listing 6.5 Surviving Corporation 2.1 Trinity Preamble Trinity Acquisition Transaction 5.2(b) Trinity Class B Common Stock 4.2 Trinity Class W Warrants 4.2 Trinity Class Z Warrants 4.2 Trinity Common Stock 4.2 Trinity Contracts 4.5 Trinity Directors 6.4 Trinity Option 4.2 Trinity Financial Statements 4.13 Trinity Permits 4.9 Trinity Principals 7.2(j) Trinity Special Meeting 3.10 Trinity Stockholders' Approval 6.4 Trinity's SEC Reports 4.14 Trinity Warrants 4.2 Varouxakis Preamble V Capital Preamble Vessels 3.9(b)(2) |
1.3 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural include the singular; and
(vi) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented (as provided in such agreements) and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns.
ARTICLE II.
THE MERGER
2.1 THE MERGER.
Upon the terms and conditions set forth in this Agreement, and in accordance with the applicable provisions of the Marshall Islands Business Corporation Act (the "BCA") and the Delaware General Corporation Law (the "DGCL"), Trinity shall be merged with and into Adventure at the Effective Time. At the Effective Time, the separate corporate existence of Trinity shall cease, and Adventure shall continue as the surviving corporation. The surviving corporation in the Merger is sometimes referred to as the "SURVIVING CORPORATION."
2.2 CLOSING; EFFECTIVE TIME.
The closing of the Merger (the "CLOSING") shall take place at 10:00
a.m. Eastern Standard Time at the offices of Seward & Kissel LLP, One Battery
Park Plaza, New York, New York 10004, on the first Business Day following the
date on which the last of the conditions set forth in Article VII hereof is
fulfilled or waived, or at such other time and place as Trinity and Adventure
shall agree (the date on which the closing occurs being the "CLOSING DATE"). On
the Closing Date, the parties shall cause the Merger to be consummated by filing
a Certificate of Merger or like instrument (the "MERGER CERTIFICATE") with the
Registrar of Corporations of the Republic of the Marshall Islands, in accordance
with the applicable provisions of the BCA (the time of acceptance by the
Registrar of Corporations of such filing being referred to herein as the
"EFFECTIVE TIME") and with the Secretary of State of the State of Delaware, in
accordance with the applicable provisions of the DGCL.
2.3 EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the BCA and the DGCL. Without limiting the generality of the foregoing, at the Effective Time, all the property, rights, privileges, powers and franchises of Trinity shall vest in the Surviving Corporation, and all debts, liabilities and duties of Trinity shall become the debts, liabilities and duties of the Surviving Corporation.
2.4 ARTICLES OF INCORPORATION; BY-LAWS.
Prior to the filing of the Adventure Registration Statement, Adventure shall amend its Articles of Incorporation and By-laws on terms reasonably satisfactory to Trinity. At the Effective Time, these amended Articles of Incorporation and By-laws shall be the Articles of Incorporation and By-laws of the Surviving Corporation.
2.5 DIRECTORS AND OFFICERS.
The directors of the Surviving Corporation immediately after the Effective Time shall be the directors set forth in Section 2.5 of the attached Adventure Disclosure Schedule, plus such other directors as are appointed by Adventure after the date hereof, each to hold the office of director of the Surviving Corporation in accordance with the provisions of the applicable laws of the Republic of the Marshall Islands and the Articles of Incorporation and By-laws of the Surviving Corporation (as amended pursuant to Section 2.4 above) until their successors are duly qualified and elected. The officers of the Surviving Corporation immediately after the Effective Time shall be such officers as are appointed by Adventure after the date hereof, each to hold office in accordance with the provisions of the By-laws of the Surviving Corporation (as amended pursuant to Section 2.4 above).
2.6 CONVERSION OF TRINITY CAPITAL STOCK.
Subject to Sections 2.7 and 2.9(e), each share of Trinity Capital Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive, at the election of the holder thereof, the Per Share Merger Consideration. At the Effective Time, all such shares of Trinity Capital Stock converted as set forth above shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate or certificates that immediately prior to the Effective Time represented any such shares of Trinity Capital Stock (the "CERTIFICATES") shall cease to have any rights with respect thereto, except the right to receive the Per Share Merger Consideration and certain dividends or other distributions in accordance with Section 2.9(c) upon the surrender of such Certificate, in accordance with Section 2.9(b). Each Trinity Warrant and Trinity Option issued and outstanding immediately prior to the Effective Time shall be converted into and become warrants and options in Adventure and shall be convertible into Adventure Shares as described in Section 6.6 of this Agreement. Exhibit 2.6 lists, as of the Effective Time, the number of Adventure Shares which shall be issued to the Adventure Shareholders and any Trinity security holder pursuant to this Section 2.6 and Section 6.6 hereof, assuming that all outstanding Trinity Capital Stock and Adventure Exchange Securities (as defined in Section 6.6) are exchanged for, or converted to, Adventure Shares as contemplated by this Agreement.
2.7 APPRAISAL RIGHTS.
To the extent required under the DGCL, notwithstanding any other provisions of this Agreement to the contrary, shares of Trinity Capital Stock that are outstanding immediately prior to the Closing and which are held by Trinity stockholders who shall not have voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly, in writing, appraisal for such shares in accordance with the applicable provisions of the DGCL (collectively, the "DISSENTING SHARES") shall not be converted into or represent the right to receive the Per Share Merger Consideration. Such Trinity stockholders shall be entitled to receive payment of the appraised value of such shares of Trinity Capital Stock held by them in accordance with the applicable provisions of the DGCL, except that all Dissenting Shares held by Trinity stockholders who failed to perfect or who have effectively withdrawn or lost their rights to appraisal of such shares of Trinity Capital Stock under the applicable provisions of the DGCL shall thereupon be deemed to have converted into and to become exchangeable, as of the expiration of the statutory notice period following the Closing, of the right to receive, without any interest thereon, the Per Share Merger Consideration, upon surrender, in the manner provided in Section 2.6 above, of the Certificate or Certificates that formerly evidenced such shares of Trinity Capital Stock. Any payments required to be made to the holders of any Dissenting Shares shall be funded by Adventure.
2.8 ANTI-DILUTION PROVISIONS.
In the event Adventure changes (or establishes a record date for changing) the number of Adventure Shares issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, recapitalization, subdivision, reclassification, combination, exchange of shares or similar transaction with respect to the outstanding Adventure Shares and the record date therefor shall be prior to the Effective Time, the Exchange Ratio and the Per Share Merger Consideration shall be proportionately adjusted to reflect such stock split, stock dividend, recapitalization, subdivision, reclassification, combination, exchange of shares or similar transaction.
2.9 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Adventure shall
deposit with such bank or trust company as may be designated by Adventure and
reasonably acceptable to Trinity (the "EXCHANGE AGENT"), for the benefit of the
holders of shares of Trinity Capital Stock, for exchange in accordance with this
Section 2.9, through the Exchange Agent, the Adventure Shares issuable pursuant
to Section 2.6 in exchange for outstanding shares of Trinity Capital Stock. At
the time of such deposit, Adventure shall irrevocably instruct the Exchange
Agent to deliver the Adventure Shares to Trinity's stockholders after the
Effective Time in accordance with the procedures set forth in this Section 2.9,
subject to Sections 2.9(f) and (g).
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of a Certificate whose shares were converted into the right to receive the applicable Per Share Merger Consideration pursuant to Section 2.6, a letter of transmittal (in form and substance satisfactory to Adventure and Trinity), with instructions for use in surrendering the Certificates in exchange for the applicable Per Share Merger Consideration with respect thereto. Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor that number of whole Adventure Shares in accordance with Section 2.9(e), together with certain dividends or other distributions in accordance with Section 2.9(c), and
the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Trinity Capital Stock that is not registered in the transfer records of Trinity, a certificate evidencing the proper number of Adventure Shares may be issued in exchange therefor to a person other than the person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such issuance shall pay any transfer or other taxes required by reason of the issuance of Adventure Shares to a person other than the registered holder of such Certificate or establish to the satisfaction of Adventure that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.9(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Per Share Merger Consideration that the holder thereof has the right to receive pursuant to the provisions of Section 2.6, plus certain dividends or other distributions in accordance with Section 2.9(c).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other distributions declared or made with respect to Adventure Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to Adventure Shares represented thereby, if any, and all such dividends and other distributions shall be paid by Adventure to the Exchange Agent, until the surrender of such Certificate in accordance with this Article II. Subject to the effect of applicable escheat or similar laws, following surrender of any such Certificate there shall be paid to the holder of whole Adventure Shares issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole Adventure Shares and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and with a payment date subsequent to such surrender payable with respect to such whole Adventure Shares.
(d) NO FURTHER OWNERSHIP RIGHTS IN TRINITY CAPITAL STOCK. All certificates evidencing Adventure Shares issued (including any dividends or other distributions paid pursuant to Section 2.9(c)) shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the shares of Trinity Capital Stock formerly represented by such Certificates. At the close of business on the day on which the Effective Time occurs, the stock transfer books of Trinity shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Trinity Capital Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for transfer or any other reason, they shall be canceled and exchanged as provided in this Article II.
(e) FRACTIONAL SHARES. No fractional shares of Adventure common stock shall be issued in the Merger. The aggregate Per Share Merger Consideration to be issued to the holder of a Certificate previously evidencing Trinity Capital Stock shall be rounded up to the nearest whole share of Adventure common stock.
(f) TERMINATION OF EXCHANGE OF ADVENTURE SHARES. Any portion
of the Adventure Shares (and any dividends or distributions thereon) that remain
undistributed to the holders of the Certificates for six months after the
Effective Time shall be delivered to Adventure, upon demand, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Adventure for, and, subject to Section 2.9(g), Adventure
shall remain liable for payment of their claim for the Per Share Merger
Consideration, certain dividends and other distributions in accordance with
Section 2.9(c).
(g) NO LIABILITY. Notwithstanding anything to the contrary in this Section 2.9, none of the Exchange Agent, the Surviving Corporation or any party to this Agreement shall be liable to a holder of Adventure Shares or Trinity Capital Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.
(h) LOST, STOLEN OR DESTROYED COMPANY CERTIFICATE. In the event any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificate, upon the making of an affidavit and indemnity of that fact by the holder thereof in a form that is reasonably acceptable to the Exchange Agent, the number of Adventure Shares as required pursuant to Section 2.6; PROVIDED, HOWEVER, that Adventure may, in its reasonably commercial discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct against any claim that may be made against Adventure or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.
2.10 DISSENTING SHARES AFTER PAYMENT OF FAIR VALUE.
Dissenting Shares, if any, after payments of fair value in respect thereto have been made to dissenting Trinity stockholders pursuant to the DGCL, shall be cancelled.
2.11 TAX AND ACCOUNTING CONSEQUENCES.
It is intended by the parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368 of the Code. Each party has consulted with, and is relying upon, its tax advisors and accountants with respect to the tax and accounting consequences of the Merger.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF ADVENTURE AND THE ADVENTURE SHAREHOLDERS
Adventure and the Adventure Shareholders hereby jointly and severally represent and warrant to Trinity as follows (subject in each case to such exceptions as are set forth or cross-referenced in the attached Adventure Disclosure Schedule in the labeled section corresponding to the Section of the representation or warranty to which such exceptions relate):
3.1 ORGANIZATION AND QUALIFICATION.
(a) Adventure has been duly organized and is validly existing as a corporation in good standing under the laws of the Republic of the Marshall Islands, with power and authority (corporate and other) to own its properties and conduct its business as currently conducted. Adventure has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each jurisdiction set forth in the Adventure Disclosure Schedule and to Adventure's Knowledge, such jurisdictions are the only ones in which it owns or leases properties, or conducts any business, so as to require such qualification, other than those jurisdictions where the failure to be so qualified or in good standing would not have a Material Adverse Effect on Adventure and the Subsidiaries.
(b) Each of the Subsidiaries has been duly organized and is validly existing as a corporation under the laws of the Republic of the Marshall Islands, with power and authority (corporate and other) to own its properties and conduct its business as currently conducted. Each Subsidiary has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each jurisdiction set forth in the Adventure Disclosure Schedule and, to the Knowledge of Adventure, such jurisdictions are the only ones in which it owns or leases properties, or conducts any business, so as to require such qualification, other than where the failure to be so qualified or in good standing would not have a Material Adverse Effect on Adventure and the Subsidiaries. All the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, and except as described in Section 3.1(b) of the Adventure Disclosure Schedule, are fully-paid and non-assessable, and are owned by Adventure, free and clear of all Liens.
(c) The copies of the respective Articles of Incorporation and By-laws of Adventure and each of the Subsidiaries, as amended to date and delivered to Trinity, are true and complete copies of these documents as now in effect. The minute books of Adventure and the Subsidiaries are accurate in all material respects.
3.2 SUBSIDIARIES.
Other than the Subsidiaries, Adventure does not hold any equity interest in any other Person. Except as described in Section 3.1(b) of the Adventure Disclosure Schedule, Adventure owns all of the issued and outstanding shares of stock of the Subsidiaries, free and clear of any Liens.
3.3 CAPITALIZATION.
(a) As of immediately prior to the Closing, the authorized capital stock of Adventure shall consist solely of 40,000,000 common shares, $0.001 par value, and 5,000,000 preferred shares, $0.001 par value, of which 4,500,000 common shares and no preferred shares will be issued and outstanding. All such common shares shall be owned solely by the Adventure Shareholders, will be duly authorized, validly issued and outstanding, fully paid and
non-assessable and, will not have been issued in violation of the preemptive rights of any Person. All of the shares of V Capital and G Bros. are owned solely by G. Gourdomichalis, S. Gourdomichalis and Varouxakis, are duly authorized, validly issued and outstanding, fully paid and non-assessable and, were not issued in violation of the preemptive rights of any Person.
(b) The Adventure Shares to be issued upon effectiveness of the Merger and upon exercise of the Adventure Exchange Securities, when issued in accordance with the terms of this Agreement, shall be duly authorized, validly issued, fully paid and non-assessable and free of all Liens.
(c) There are also 950,000 shares of Adventure which are reserved for issuance upon exercise of the Adventure options and/or warrants that are outstanding on the date hereof as set forth in Section 3.3 of the Adventure Disclosure Schedule (the "ADVENTURE OPTIONS").
(d) The authorized capital stock of Adventure Two S.A. as of the date hereof consists solely of 500 bearer shares of common stock, no par value, all of which shares are issued and outstanding. All of such shares of common stock that are issued and outstanding are owned by Adventure, are duly authorized, validly issued and outstanding, fully paid and non-assessable and were not issued in violation of the preemptive rights of any Person.
(e) The authorized capital stock of Adventure Three S.A. as of the date hereof consists solely of 500 bearer shares of common stock, no par value, all of which shares are issued and outstanding. All of such shares of common stock that are issued and outstanding are owned by Adventure, are duly authorized, validly issued and outstanding, fully paid and non-assessable and were not issued in violation of the preemptive rights of any Person.
3.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Adventure has full corporate power and authority, and the Adventure Shareholders have full power and authority, to enter into this Agreement and to consummate the transactions contemplated hereby. Adventure's execution and delivery of this Agreement, and its consummation of the transactions contemplated hereby, have been duly authorized by its board of directors and no other corporate proceedings on its part are necessary to authorize its execution and delivery of this Agreement and its consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Adventure and the Adventure Stockholders, and constitutes its and their valid and binding agreement, enforceable against them in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and (ii) general equitable principles ((i) and (ii) the "ENFORCEABILITY EXCEPTION").
(b) All material consents, approvals, authorizations, orders, licenses, registrations, clearances and qualifications of or with any Governmental Authority having jurisdiction over Adventure or the Subsidiaries or any of their properties required for the execution and delivery by Adventure and
the Adventure Stockholders of this Agreement to be duly and validly authorized have been obtained or made and are in full force and effect.
(c) Neither Adventure nor any of the Subsidiaries (i) is in violation of its respective Articles of Incorporation or By-laws or (ii) is, or with the giving of notice or lapse of time or both would be, in violation of or in default under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Adventure or any of the Subsidiaries is a party or by which it or any of them or any of their respective properties is bound, except for violations and defaults of the kind referred to in clause (ii) which individually or in the aggregate are not material to Adventure and the Subsidiaries taken as a whole. The performance by Adventure and the Adventure Stockholders of their obligations under this Agreement and the consummation of the transactions contemplated herein will not conflict with its Articles of Incorporation or By-laws or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Adventure or any of the Subsidiaries is a party or by which Adventure or any of the Subsidiaries is bound or to which any of the property or assets of Adventure or any of the Subsidiaries is subject, nor will any such action result in any violation of the provisions of the Articles of Incorporation or the By-laws of Adventure, as amended, or any of the Subsidiaries or any applicable Law or any Order, rule or regulation of any Governmental Authority having jurisdiction over Adventure, any of the Subsidiaries or any of their respective properties. No consent, approval, authorization, order, license, registration or qualification of or with any such Governmental Authority is required for the consummation by Adventure or the Adventure Shareholders of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, orders, licenses, registrations or qualifications (i) as have been obtained, or (ii) which individually or in the aggregate are not material to Adventure and the Subsidiaries taken as a whole.
3.5 CONTRACTS; NO DEFAULT.
(a) Section 3.5(a) of the Adventure Disclosure Schedule contains a true and complete list of all contracts, agreements, commitments and other instruments (whether oral or written) to which Adventure or any of the Subsidiaries is a party that (i) involve a receipt or an expenditure by Adventure or any of the Subsidiaries or require the performance of services or delivery of goods to, by, through, on behalf of or for the benefit of Adventure or any of the Subsidiaries, which in each case, relates to a contract, agreement, commitment or instrument that either (A) requires payments or receipts in excess of $50,000 per year or (B) is not terminable by Adventure or any of the Subsidiaries on notice of thirty (30) days or less without penalty or Adventure or any of the Subsidiaries being liable for damages of $50,000 or more, or (ii) involve an obligation for the performance of services or delivery of goods by Adventure or any of the Subsidiaries that cannot, or in reasonable probability will not, be performed within one year from the date hereof.
(b) All of the contracts, agreements, commitments and other instruments described in Section 3.5(a) of the Adventure Disclosure Schedule (individually, a "CONTRACT" and collectively, the "CONTRACTS") are valid and
binding upon Adventure or the Subsidiaries, as applicable, and to the Knowledge of Adventure, the other parties thereto, and are in full force and effect and enforceable in accordance with their terms, subject to the Enforceability Exception, and neither Adventure nor the Subsidiaries, nor to the Knowledge of Adventure, any other party to any Contract, has materially breached any provision of, nor has any event occurred which, with the lapse of time or action by a third party, could result in a material default under, the terms thereof. None of the Adventure Shareholders has received any payment in violation of law from any contracting party in connection with or as an inducement for causing Adventure or any of the Subsidiaries to enter into any Contract.
3.6 LITIGATION.
Except as set forth in Section 3.6 of the Adventure Disclosure Schedule, there are no outstanding Orders, and no legal or governmental investigations, actions, suits or proceedings pending or, to the Knowledge of Adventure and the Adventure Shareholders, threatened against or affecting Adventure or any of the Subsidiaries or any of their respective properties or to which Adventure or any of the Subsidiaries is or may be a party or to which any property of Adventure or any of the Subsidiaries is or may be the subject which, if determined adversely to Adventure or any of the Subsidiaries could individually or in the aggregate have or reasonably be expected to have, a Material Adverse Effect on Adventure and the Subsidiaries taken as a whole, and, to the best of the Knowledge of Adventure and the Adventure Shareholders, no such proceedings are threatened or contemplated by any Governmental Authorities or threatened by others.
3.7 TAXES.
(a) Adventure and the Subsidiaries have duly filed with the appropriate Governmental Authorities all material franchise, income and all other material Tax Returns other than Tax Returns the failure to file of which would have no Material Adverse Effect on Adventure or the Subsidiaries. All such Tax Returns were, when filed, and are accurate and complete in all material respects and were prepared in conformity with applicable Laws. Adventure and the Subsidiaries have paid or will pay in full or have adequately reserved against all Taxes otherwise assessed against it through the Closing Date. Neither Adventure nor any Subsidiary is a party to any pending action or proceeding by any Governmental Authority for the assessment of any Tax, and no claim for assessment or collection of any Tax has been asserted in writing against Adventure of any of the Subsidiaries that has not been paid. There are no Liens for Taxes upon the assets of Adventure or any of the Subsidiaries (other than Liens for Taxes not yet due and payable). There is no valid basis, to the Knowledge of Adventure, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to Adventure or any of the Subsidiaries by any Governmental Authority.
(b) No stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other Taxes are payable by or on behalf of Trinity to the Marshall Islands or Greece or any political subdivision or Taxing Authority thereof or therein in connection with the issuance of the
Adventure Shares to the Trinity stockholders, the issuance of the Adventure Exchange Securities or the delivery by the Trinity stockholders of the Trinity Capital Stock or the delivery of the Trinity Warrants and Trinity Options by the holders thereof.
3.8 NO VIOLATION OF LAW.
(a) Neither Adventure nor any Subsidiary is in violation of or has been given notice or been charged with any violation of, any Law or Order (including, without limitation, any applicable environmental law, ordinance or regulation) of any Governmental Authority, except for violations which, in the aggregate, do not have, and would not reasonably be expected to have, a Material Adverse Effect on Adventure. Neither Adventure nor any Subsidiary has received any written notice that any investigation or review with respect to it by any Governmental Authority is pending or threatened, other than, in each case, those the outcome of which, as far as reasonably can be foreseen, would not reasonably be expected to have a Material Adverse Effect on Adventure.
(b) Each of Adventure and the Subsidiaries owns, possesses or has obtained, all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all Governmental Authorities, all self-regulatory organizations and all courts and other tribunals, necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof, other than such licenses, permits, certificates, consents, orders, approvals, other authorizations, declarations and filings which individually or in the aggregate are not material to Adventure and the Subsidiaries taken as a whole, and neither Adventure nor any such Subsidiary has received any actual notice of any proceeding relating to revocation or modification of any such license, permit, certificate, consent, order, approval or other authorization, and each of Adventure and the Subsidiaries is in compliance with all Laws relating to the conduct of its business as conducted as of the date hereof other than any failure to so comply that would not have a Material Adverse Effect on Adventure.
(c) Adventure and the Subsidiaries (i) are in compliance with any and all applicable foreign, federal, provincial, state and local Laws, including any applicable regulations and standards adopted by the International Maritime Organization, relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, petroleum pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses, other approvals, authorizations and certificates of financial responsibility required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, have a Material Adverse Effect on Adventure.
(d) None of the transactions contemplated herein will violate any Foreign Assets Control Regulations of the United States contained in Title 31, Code of Federal Regulations, Parts 500, 505, 515 and 535.
3.9 PROPERTIES.
(a) Except as provided herein, Adventure and the Subsidiaries have good and marketable title to all of the assets and properties which they purport to own as reflected on the most recent balance sheet comprising a portion of the Adventure Financial Statements, or thereafter acquired (except assets and properties sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business). Adventure and the Subsidiaries have a valid leasehold interest in all properties of which it is the lessee and each such lease is valid, binding and enforceable against it, and, to the Knowledge of Adventure, the other parties thereto in accordance with its terms, subject to the Enforceability Exception. Neither Adventure, the Subsidiaries nor, to Adventure's Knowledge, the other parties thereto are in default in the performance of any material provision thereunder. Neither the whole nor any material portion of the assets of Adventure or the Subsidiaries is subject to any Order to be sold or is being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor, nor, to Adventure's Knowledge, has any such condemnation, expropriation or taking been proposed. None of the material assets of Adventure or the Subsidiaries is subject to any restriction which would have a Material Adverse Effect on Adventure.
(b) Except as set forth in Section 3.9(b) of the Adventure Disclosure Schedule,
(1) Adventure Two S.A. is the sole owner of the vessel known as the "Free Destiny" (the "FREE DESTINY"), free and clear of all Liens. The Free Destiny, (i) is a diesel motor vessel having 25,321 deadweight tons, 16,282 gross tons, official number 2077 built in Bulgaria, in 1982, (ii) has been documented in the name of Adventure Two S.A. under the name "Free Destiny" pursuant to the laws of the Republic of The Marshall Islands, with its port of documentation at Majuro, Marshall Islands, (iii) has been classified LRS + 100 A1 Bulkcarrier Class 3 in Lloyds Register of Shipping and, as of the date hereof, is in class without recommendation; and (iv) is covered by hull and machinery, war risk and protection and indemnity insurance; and
(2) Adventure Three S.A. is the sole owner of the vessel known as the "Free Envoy" (the "FREE ENVOY" and collectively with the Free Destiny, the "VESSELS"), free and clear of all Liens. The Free Envoy, (i) is a diesel motor vessel having 26,318 deadweight tons, 15,715 gross tons, official number 2161 built in Japan, in 1984, (ii) has been documented in the name of Adventure Three S.A. under the name "Free Envoy" pursuant to the laws of the Republic of The Marshall Islands, with its port of documentation at Majuro, Marshall Islands, (iii) has been classified KRSI Bulkcarrier ESP (HC) in the Korean Register of Shipping and, as of the date hereof, is in class without recommendation; and (iv) is covered by hull and machinery, war risk and protection and indemnity insurance.
(c) The material equipment, fixtures and other personal property of Adventure and the Subsidiaries are in good operating condition and repair (ordinary wear and tear excepted) for the conduct of its business as
presently being conducted, except where the failure to be in such condition or repair would not have a Material Adverse Effect on Adventure.
3.10 PROXY STATEMENT.
None of the information to be supplied by Adventure or the Adventure Shareholders for inclusion in the Proxy Statement, or in any amendments or supplements thereto, to be distributed by to the stockholders of Trinity in connection with the meeting of such stockholders (the "TRINITY SPECIAL MEETING") to vote upon this Agreement and the transactions contemplated hereby, will, at the time of the mailing of the Proxy Statement and at the time of the Trinity Special Meeting contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
3.11 LABOR MATTERS.
Neither Adventure nor any Subsidiary is a party to any union contract
or other collective bargaining agreement. Adventure and the Subsidiaries are in
compliance in all material respects with all applicable Laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and Adventure and the Subsidiaries are not engaged in any
unfair labor practice. There is no labor strike, slowdown or stoppage pending
(or, to the Knowledge of Adventure, any labor strike or stoppage threatened)
against or affecting Adventure or the Subsidiaries. No petition for
certification has been filed and is pending before any Governmental Authority
with respect to any employees of Adventure or the Subsidiaries who are not
currently organized.
3.12 EMPLOYEES.
To Adventure's knowledge, no key employee or group of employees has any plans to terminate employment with Adventure or any of the Subsidiaries.
3.13 FINANCIAL STATEMENTS.
Adventure has provided Trinity with a draft of the audited consolidated balance sheet as of December 31, 2004 and related audited consolidated statements of income, cash flows and stockholders' equity of Adventure and the Subsidiaries for the period April 23, 2004 (inception) through December 31, 2004 (collectively, the "ADVENTURE FINANCIAL STATEMENTS"). The Adventure Financial Statements present fairly, in all material respects, the consolidated financial position and results of operations of Adventure and the Subsidiaries as of the dates, period and year indicated, prepared in accordance with GAAP, and to the Knowledge of Adventure, in accordance with Regulation S-X, promulgated by the SEC, and, in particular, Rules 1-02 and 3-05 thereunder. Without limiting the generality of the foregoing, (i) as of the date of the consolidated balance sheet comprising a portion of the Adventure Financial Statements, there was no material debt, liability or obligation of any nature not reflected or reserved against in the Adventure Financial Statements or in the notes thereto required
to be so reflected or reserved in accordance with GAAP, and (ii) there are no assets of Adventure or the Subsidiaries, the value of which (in the reasonable judgment of Adventure) is materially overstated in the Adventure Financial Statements. Except as disclosed therein or in Section 3.13 of the Adventure Disclosure Schedule or as incurred in the ordinary course of business since December 31, 2004, Adventure has no known material contingent liabilities (including liabilities for Taxes) other than as contemplated hereunder or in connection herewith. Adventure is not a party to any contract or agreement for the forward purchase or sale of any foreign currency and has not invested in any "derivatives." There will not be any material adverse change to Adventure's final audited consolidated balance sheet as of December 31, 2004 and related audited consolidated statements of income, cash flows and stockholders' equity of Adventure and the Subsidiaries for the period April 23, 2004 (inception) through December 31, 2004 (the "FINAL STATEMENTS"). Adventure shall provide Trinity with true, correct and complete copies of the Final Statements as soon as they have been prepared.
3.14 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth in Section 3.14 of the Adventure Disclosure Schedule or in connection with this Agreement and the transactions contemplated hereby, since December 31, 2004 there has not been:
(a) any material adverse change in the financial condition, operations, properties, assets, liabilities or business of Adventure;
(b) any material damage, destruction or loss of any material properties of Adventure and the Subsidiaries, whether or not covered by insurance, which would have a Material Adverse Effect on Adventure;
(c) any material change in the manner in which the business of the Company has been conducted, which would have a Material Adverse Effect on Adventure;
(d) any material change in the treatment and protection of trade secrets or other confidential information of Adventure and the Subsidiaries, which would have a Material Adverse Effect on Adventure; and
(e) any occurrence not included in paragraphs (a) through (d) of this Section 3.14 which has resulted, or which Adventure has reason to believe, could reasonably be expected to result, in a Material Adverse Effect on Adventure.
3.15 INTELLECTUAL PROPERTY; SOFTWARE.
(a) Section 3.15(a) of the Adventure Disclosure Schedule sets forth a complete and correct list in all material respects of all patents, Trademarks, copyright registrations, and applications therefor, applicable to or used in the business of Adventure and the Subsidiaries, together with a complete list of all licenses granted by or to Adventure and the Subsidiaries with respect to any of the above (collectively, "ADVENTURE INTELLECTUAL PROPERTY").
To Adventure's Knowledge, all Adventure Intellectual Property is owned by Adventure or one of the Subsidiaries, free and clear of all Liens, except where the failure to own or use such Adventure Intellectual Property would not have a Material Adverse Effect on Adventure, or is used by Adventure or one of the Subsidiaries pursuant to valid licenses. To Adventure's Knowledge, neither Adventure nor any of the Subsidiaries is currently in receipt of any notice of any violation or infringement of, and neither Adventure nor any of the Subsidiaries is knowingly violating or infringing in any material respect, the rights of others in, or to any patent, unpatented invention, trademark, tradename, service mark, copyright, trade secret, know-how, design, process or other intangible asset.
(b) (i) Except as set forth on Schedule 3.15(b)(i) of the Adventure Disclosure Schedule, Adventure or one of the Subsidiaries has title to all material computer software owned by Adventure or one of the Subsidiaries (other than "off-the-shelf" software not customized for its use ("OWNED SOFTWARE")) free and clear of all Liens. Except as set forth in Section 3.15(b)(i) or (ii) of the Adventure Disclosure Schedule, the Owned Software is not dependent on any Licensed Software in order to operate fully in the manner in which it is intended. The source code of any Owned Software has not been published or knowingly disclosed to any other parties, except pursuant to contracts requiring such other parties to keep the source code of any Owned Software confidential.
(ii) Section 3.15(b)(ii) of the Adventure Disclosure Schedule sets forth a list of the agreements which require the payment of license fees, rents, royalties or other charges by Adventure or the Subsidiaries with respect to all material software (other than "off-the-shelf" software that has not been customized for its use) under which Adventure or a Subsidiary is a licensee, lessee or otherwise has obtained the right to use (the "LICENSED SOFTWARE"). Adventure or a Subsidiary, as applicable, has the right and license to use, sublicense, modify and copy Licensed Software, free and clear of any limitations or encumbrances, except as may be set forth in Section 3.15(b)(ii) of the Adventure Disclosure Schedule or in the agreements referenced therein. Adventure and the Subsidiaries are in material compliance with all provisions of each license, lease or other similar agreement pursuant to which it has rights to use the Licensed Software. Except as disclosed on Section 3.15(b)(ii) of the Adventure Disclosure Schedule, none of the Licensed Software has been incorporated into or made a part of any Owned Software or any other Licensed Software. Neither Adventure nor any Subsidiary has published or knowingly disclosed any Licensed Software to any other party except, in the case of Licensed Software which it leases or markets to others, in accordance with and as permitted by any license, lease or similar agreement relating to the Licensed Software and except pursuant to contracts requiring such other parties to keep the Licensed Software confidential. As of the date hereof, to the Adventure's knowledge, no party to whom Adventure or a Subsidiary has disclosed Licensed Software has breached such obligation of confidentiality.
(iii) The Owned Software and Licensed Software constitute all software used in the business of Adventure (collectively, the "ADVENTURE SOFTWARE"). To the best of Adventure's Knowledge, the transactions contemplated herein will not cause a breach or default under any license, lease or similar
agreement relating to Adventure Software or impair the ability of Trinity and Adventure to use Adventure Software subsequent to the Effective Time in the same manner as Adventure Software is currently used by Adventure. Adventure is not knowingly infringing in any material respect any intellectual property rights of any other person or entity with respect to Adventure Software, and, except as set forth in Section 3.15(b)(iii) of the Adventure Disclosure Schedule, to Adventure's Knowledge, no other person or entity is infringing any intellectual property rights of Adventure with respect to the Adventure Software.
3.16 BUSINESS LOCATIONS.
Except as set forth in Section 3.16 of the Adventure Disclosure Schedule, neither Adventure nor the Subsidiaries own or lease real property in any state or country. Neither Adventure nor any Subsidiary has any executive offices or places of business except as otherwise set forth on the Adventure Disclosure Schedule.
3.17 COMPENSATION OF DIRECTORS, OFFICERS AND EMPLOYEES.
Section 3.17 of the Adventure Disclosure Schedule contains a true and complete list showing (a) the names of all directors and officers of Adventure and (b) the names of all salaried persons whose aggregate compensation for purposes of Tax reporting from Adventure in the fiscal year ended December 31, 2004 was, or in the year ending December 31, 2005 is expected to be $50,000 or more per year.
3.18 DIVIDENDS AND DISTRIBUTIONS.
All dividends and other distributions declared and payable on the shares of capital stock of the Subsidiaries may under the current Laws of the Republic of the Marshall Islands be paid in United States dollars and may be freely transferred out of the Marshall Islands and all such dividends and other distributions are not subject to withholding or other taxes under the current laws and regulations of the Republic of the Marshall Islands and are otherwise free and clear of any other Tax, withholding or deduction in, and without the necessity of obtaining any consents, approvals, authorizations, orders, licenses, registrations, clearances and qualifications of or with any Governmental Authority in, the Republic of the Marshall Islands.
3.19 RELATED TRANSACTIONS.
Except as set forth in Section 3.19 of the Adventure Disclosure Schedule, no relationship, direct or indirect, exists between or among Adventure or either of the Subsidiaries on the one hand, and the directors, officers, shareholders, customers or suppliers of Adventure or either of the Subsidiaries on the other hand. Since the date of its incorporation, Adventure has not, directly or indirectly, including through any Subsidiary, extended or maintained credit, or arranged for the extension of credit, or renewed or amended any extension of credit, in the form of a personal loan to or for any of its directors or executive officers.
3.20 INVESTMENT COMPANY.
Adventure is not an "investment company' or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940.
3.21 PASSIVE FOREIGN INVESTMENT COMPANY.
To Adventure's best Knowledge, it does not believe it is a Passive Foreign Investment Company ("PFIC") within the meaning of Section 1296 of the Code, and does not believe it is likely to become a PFIC.
3.22 INSURANCE.
Adventure and each of the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary and in accordance with standard industry practice in the businesses in which they are engaged. Neither Adventure nor any such Subsidiary has received any notice from any insurance company that any insurance policy has been canceled or that such insurance company intends to cancel any such policy. Neither Adventure nor any such Subsidiary has reason to believe that Adventure and each Subsidiary will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business. As soon as practicable following the execution of this Agreement, Adventure will supplement the Adventure Disclosure Schedule setting forth each type of insurance maintained by Adventure, and with respect to each such insurance, the name of the insurer, the amount of coverage, the amount of premiums and the expiration date of each insurance policy.
3.23 FUNDS.
Neither Adventure nor any of the Subsidiaries, nor any director, shareholder, officer, agent, employee or other person associated with or acting on behalf of Adventure or any of the Subsidiaries, has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
3.24 DISCLOSURE CONTROLS.
Adventure has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act), which (i) are designed to ensure that material information relating to Adventure, including the Subsidiaries, is made known to Adventure's principal executive officer and its principal financial officer by others within those
entities, particularly during the preparation of the Proxy Statement; (ii) have been evaluated for effectiveness as of the date of this Agreement; and (iii) are effective in all material respects to perform the functions for which they were established.
3.25 ABSENCE OF MATERIAL WEAKNESSES.
Based on the evaluation of its internal controls over financial reporting, Adventure is not aware of (i) any significant deficiency or material weakness in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect Adventur"s ability to record, process, summarize and report financial information; or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls over financial reporting.
3.26 BOOKS, RECORDS AND ACCOUNTS.
Adventure's books, records and accounts fairly and accurately reflect in all material respects transactions and dispositions of assets by Adventure and the Subsidiaries, and to the Knowledge of Adventure, the system of internal accounting controls of Adventure is sufficient to assure that: (a) transactions are executed in accordance with management's authorization; (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and to maintain accountability for assets; (c) access to assets is permitted only in accordance with management's authorization; and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
3.27 BROKERS AND FINDERS.
Except for Poseidon Capital Corp., Adventure has not employed any investment banker, broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement which would be entitled to any investment banking, brokerage, finder's or similar fee or commission in connection with this Agreement or the transactions contemplated hereby.
3.28 ACQUISITION OF SHARES IN ADVENTURE.
Each Adventure Shareholder is an "accredited investor," within the meaning of Rule 501(a) of Regulation D, promulgated under the Securities Act. Each Adventure Shareholder acquired his shares in Adventure in a transaction exempt from the registration requirements of the Securities Act. Each Adventure Shareholder acknowledges and agrees that for so long as is required by applicable United States Law, a legend shall be placed on each certificate of shares, instrument or document evidencing any of the shares owned by such Adventure Shareholder substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Notwithstanding anything to the contrary contained herein, the Adventure Shareholders and their respective Affiliates may, collectively and, among them as they shall mutually agree, pledge or hypothecate up to an aggregate of 750,000 of their shares in Adventure to banks or other financial institutions to collateralize bona fide personal borrowings.
3.29 NO OMISSIONS OR UNTRUE STATEMENTS.
No representation or warranty made by Adventure or the Adventure Shareholders to Trinity in this Agreement, the Adventure Disclosure Schedule or in any certificate of an Adventure Shareholder or an Adventure officer required to be delivered to Trinity pursuant to the terms of this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein in light of the circumstances in which made not misleading as of the date hereof and as of the Closing Date.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF TRINITY
Trinity hereby represents and warrants to Adventure and the Adventure Shareholders as follows (subject in each case to such exceptions as are set forth or cross-referenced in the attached Trinity Disclosure Schedule in the labeled section corresponding to the Section of the representation or warranty to which such exceptions relate):
4.1 ORGANIZATION AND QUALIFICATION.
Trinity is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Trinity has all requisite corporate power to carry on its business as it is now being conducted and is duly qualified to do business as a foreign corporation and is in good standing in all jurisdictions set forth in Section 4.1 of the Trinity Disclosure Schedule, and to Trinity's Knowledge, such jurisdictions are the only ones in which the properties owned, leased or operated by Trinity or the nature of the business conducted by Trinity makes such qualification necessary, except where the failure to qualify (individually or in the aggregate) will not have any Material Adverse Effect on Trinity. The copies of the Certificate of Incorporation and By-laws of Trinity, as amended to date and delivered to the Adventure Shareholders, are true and complete copies of these documents as now in effect. The minute books of Trinity are accurate in all material respects.
4.2 CAPITALIZATION.
The authorized capital stock of Trinity as of the date hereof consists of 20,000,000 shares of common stock, $0.0001 par value per share (the "TRINITY COMMON STOCK"), of which 287,600 shares are issued and outstanding; 2,000,000 shares of Class B common stock, $0.0001 par value per share (the "TRINITY CLASS B COMMON STOCK"), of which 1,495,000 shares are issued and outstanding; and 5,000 shares of preferred shares, $0.0001 par value, none of which are outstanding. In addition, Trinity has reserved 280,000 shares of Trinity Common Stock and 130,000 shares of Trinity Class B Common Stock for issuance pursuant to the exercise of an option (the "TRINITY OPTION") sold to the representative of the underwriters in Trinity's initial public offering. Furthermore, there are authorized, issued and outstanding 1,828,750 Class W Warrants (the "TRINITY CLASS W WARRANTS") and 1,828,750 Class Z Common Stock Purchase Warrants (the "TRINITY CLASS Z WARRANTS" and, collectively with the Trinity Class W Warrants, the "TRINITY WARRANTS") providing for the issuance, upon exercise, of a like number of shares of Trinity Common Stock. The Trinity Class W Warrants and the Trinity Class Z Warrants are each exercisable at $5.00 per share and are each callable for redemption by Trinity upon the occurrence of certain events specified therein. All of the outstanding securities of Trinity are duly authorized, validly issued, fully paid and non-assessable, and were not issued in violation of the preemptive rights of any Person. All of the outstanding securities of Trinity, including the Trinity Common Stock, the Trinity Class B Common Stock and the Trinity Warrants, were issued in compliance with all applicable securities laws. No shares of capital stock are held in the treasury of Trinity. Other than as stated in this Section 4.2, there are no outstanding subscriptions, options, warrants, calls or rights of any kind issued or granted by, or binding upon Trinity, to purchase or otherwise acquire any shares of capital stock of Trinity or other securities of Trinity. Except as stated in this Section 4.2, there are no outstanding securities convertible or exchangeable, actually or contingently, into shares of Trinity Common Stock or other securities of Trinity. At the Effective Time, Trinity shall have approximately $7,350,000 but not less than $7,000,000 in cash or cash equivalents after giving effect to (a) the payment or accrual on or prior to the Effective Time of all expenses incurred by Trinity, including, but not limited to, the fees and expenses of Trinity's attorneys, accountants and investment bankers (including HCFP/Brenner Securities) LLC, and (b) any payments to be made to dissenting Trinity stockholders, in connection with the transactions contemplated by this Agreement.
4.3 SUBSIDIARIES.
Trinity has no subsidiaries. Trinity does not hold any equity interest in any other Person.
4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Trinity has full corporate power and authority to enter into this Agreement and, subject to the Trinity Stockholders' Approval, to consummate the transactions contemplated hereby. Trinity's execution and delivery of this Agreement, and its consummation of the transactions contemplated hereby, have been duly authorized by its board of directors and no other corporate proceedings on its part are necessary to authorize its execution and delivery of this Agreement and its consummation of the transactions
contemplated hereby, except for the Trinity Stockholders' Approval which will be solicited in accordance with Section 6.2 hereof. This Agreement has been duly and validly executed and delivered by Trinity, and constitutes its valid and binding agreement, enforceable against it in accordance with its terms, except that such enforcement may be subject to the Enforceability Exception.
(b) Trinity's execution and delivery of this Agreement does
not, and its consummation of the transactions contemplated hereby will not,
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Lien upon any of its properties or
assets under any of the terms, conditions or provisions of (i) its Certificate
of Incorporation or By-laws, (ii) subject to obtaining the Trinity Stockholders'
Approval, any Law or Order, injunction, writ, permit or license of any
Governmental Authority applicable to it or any of its properties or assets, or
(iii) any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument, obligation or agreement
of any kind to which it is now a party or by which it or any of its properties
or assets may be bound, excluding from the foregoing clauses (ii) and (iii),
such violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that do not, in
the aggregate, have a Material Adverse Effect on Trinity.
(c) Except for the filing and clearance of preliminary proxy materials with the SEC pursuant to the Exchange Act, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for Trinity's execution and delivery of this Agreement or its consummation of the transactions contemplated hereby, other than such declarations, filings, registrations, notices, authorizations, consents or approvals which, if not made or obtained, as the case may be, would not, in the aggregate, have a Material Adverse Effect on Trinity.
4.5 CONTRACTS LISTED; NO DEFAULT.
All material contracts, agreements, licenses, leases, easements, permits, rights of way, commitments and understandings, written or oral, connected with or relating in any respect to the present or future operations of Trinity are, with the exception of this Agreement and the transactions contemplated hereby, described in Trinity's SEC Reports and listed as exhibits thereto (the "TRINITY CONTRACTS"). The Trinity Contracts are valid and binding upon Trinity, and to Trinity's Knowledge, the other parties thereto, and are in full force and effect and enforceable in accordance with their terms, subject to the Enforceability Exception and neither Trinity, nor to Trinity's Knowledge, any other party to any Trinity Contract, has materially breached any provision of, nor has any event occurred which, with the lapse of time or action by a third party, could result in a material default under, the terms thereof. To the Knowledge of Trinity, no stockholder of Trinity has received any payment in violation of law from any contracting party in connection with or as an inducement for causing Trinity to enter into any Trinity Contract.
4.6 LITIGATION.
There is no (i) claim, action, suit or proceeding pending or, to
Trinity's Knowledge, threatened against or directly relating to Trinity before
any Governmental Authority, or (ii) outstanding Order, or application, request
or motion therefor, of any Governmental Authority in a proceeding to which
Trinity or any of its assets was or is a party except, in the case of clauses
(i) and (ii) above, such as would not, individually or in the aggregate, either
materially impair or preclude Trinity's ability to consummate the Merger or the
other transactions contemplated hereby or have a Material Adverse Effect on
Trinity.
4.7 TAXES.
Trinity has duly filed with the appropriate Governmental Authorities all Tax Returns required to be filed by it other than Tax Returns which the failure to file would have no Material Adverse Effect on Trinity. All such Tax Returns were, when filed, and are accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations. Trinity has paid or will pay in full or has adequately reserved against all Taxes otherwise assessed against it through the Closing Date. Trinity is not a party to any pending action or proceeding by any Governmental Authority for the assessment of any Tax, and no claim for assessment or collection of any Tax has been asserted against Trinity that has not been paid. There are no Tax Liens upon the assets of Trinity (other than Liens for Taxes not yet due and payable). There is no valid basis, to Trinity's Knowledge, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to Trinity by any Governmental Authority.
4.8 EMPLOYEE PLANS.
Trinity has no employee benefit plans as defined in Section 3(3) of ERISA nor any employment agreements.
4.9 NO VIOLATION OF LAW.
Trinity is not in violation of and has not been given notice or been charged with any violation of, any Law, or Order, (including, without limitation, any applicable environmental law, ordinance or regulation) of any Governmental Authority, except for violations which, in the aggregate, do not have, and would not reasonably be expected to have, a Material Adverse Effect on Trinity. Trinity has not received any written notice that any investigation or review with respect to it by any Governmental Authority is pending or threatened, other than, in each case, those the outcome of which, as far as reasonably can be foreseen, would not reasonably be expected to have a Material Adverse Effect on Trinity. Trinity has all permits, licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct its business as presently conducted, except for those, the absence of which, alone or in the aggregate, would not have a Material Adverse Effect on Trinity (collectively, the "TRINITY PERMITS"). Trinity (a) has duly and timely filed all reports and other information required to be filed with any Governmental Authority in connection with the Trinity
Permits, and (b) is not in violation of the terms of any of the Trinity Permits,
except for such omissions or delays in filings, reports or violations which,
alone or in the aggregate, would not have a Material Adverse Effect on Trinity.
Section 4.9 of the Trinity Disclosure Schedule contains a list of the Trinity
Permits.
4.10 PROPERTIES.
Trinity has good and marketable title to all of the assets and properties which it purports to own as reflected on the most recent balance sheet comprising a portion of the Trinity Financial Statements or thereafter acquired (except assets and properties sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business). Trinity has a valid leasehold interest in all properties of which it is the lessee and each such lease is valid, binding and enforceable against Trinity, and, to the knowledge of Trinity, the other parties thereto in accordance with its terms, subject to the Enforceability Exception. Neither Trinity nor, to Trinity's Knowledge, the other parties thereto are in default in the performance of any material provision thereunder. Neither the whole nor any material portion of the assets of Trinity is subject to any governmental decree or order to be sold or is being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor, nor, to the Knowledge of Trinity, has any such condemnation, expropriation or taking been proposed. None of the material assets of Trinity is subject to any restriction which would prevent continuation of the use currently made thereof or materially adversely affect the value thereof.
4.11 PROXY STATEMENT.
None of the information to be supplied by Trinity for inclusion in the Proxy Statement or in any amendments thereof or supplements thereto, at the time of the mailing of the Proxy Statement and at the time of the Trinity Special Meeting contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
4.12 BUSINESS.
Trinity, since its formation, has engaged in no business other than to seek to serve as a vehicle for the acquisition of an operating business, and, except for this Agreement, is not a party to any contract or agreement for the acquisition of an operating business. Trinity has no employees.
4.13 FINANCIAL STATEMENTS.
The financial statements of Trinity (collectively, the "TRINITY FINANCIAL STATEMENTS") included in Trinity's SEC Reports present fairly, in all material respects, the financial position and results of operations of Trinity as of the respective dates, years and periods indicated, prepared in accordance with GAAP, applied on a consistent basis, and to the Knowledge of Trinity, in accordance with Regulation S-X of the SEC and, in particular, Rules 1-02 and 3-05 thereunder (subject, in the case of unaudited interim period financial
statements, to normal and recurring year-end adjustments which, individually or collectively, are not material to Trinity). Without limiting the generality of the foregoing, (i) there is no basis for any assertion against Trinity as of the date of the most recent balance sheet comprising a portion of the Trinity Financial Statements of any material debt, liability or obligation of any nature not fully reflected or reserved against in the Trinity Financial Statements or in the notes thereto required to be so reflected or reserved in accordance with GAAP; and (ii) there are no assets of Trinity, the value of which (in the reasonable judgment of Trinity) is materially overstated in the Trinity Financial Statements. Except as disclosed therein or as incurred in the ordinary course of business since December 31, 2004, Trinity has no known material contingent liabilities (including liabilities for Taxes). Trinity is not a party to any contract or agreement for the forward purchase or sale of any foreign currency and has not invested in any "derivatives."
4.14 TRINITY'S SEC REPORTS.
The Trinity Common Stock has been registered under Section 12 of the Exchange Act on Form 8-A. Since its inception, Trinity has filed all reports, registration statements and other documents, together with any amendments thereto, required to be filed under the Securities Act and the Exchange Act, including but not limited to reports on Form 10-K and Form 10-Q, and Trinity will file all such reports, registration statements and other documents required to be filed by it from the date of this Agreement to the Closing Date (all such reports, registration statements and documents, including its Form 8-A, filed or to be filed with the SEC, including Trinity's initial registration statement relating to the Trinity Common Stock, and the Trinity Warrants, with the exception of the Proxy Statement, are collectively referred to as "TRINITY'S SEC REPORTS"). As of their respective dates, Trinity's SEC Reports complied or will comply in all material respects with all rules and regulations promulgated by the SEC and did not or will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Trinity has provided to the Adventure Shareholders a true and complete copy of all of Trinity's SEC Reports filed on or prior to the date hereof, and will promptly provide to the Adventure Shareholders a true and complete copy of any such reports filed after the date hereof and prior to the Closing Date. Neither Trinity nor any of its respective directors or officers is the subject of any investigation, inquiry or proceeding before the SEC or any state securities commission or administrative agency.
4.15 OTC BULLETIN BOARD.
Each of the Trinity Common Stock, Trinity Class B Common Stock, Trinity Class W Warrants and Trinity Class Z Warrants are quoted on the OTC Bulletin Board under the respective symbols "TPQCA", "TPQCB", TPQCW and "TPQCL," and Trinity is in compliance in all respects with all rules and regulations of the National Association of Securities Dealers, Inc. applicable to Trinity and to the inclusion for quotation of such securities on the OTC Bulletin Board.
4.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2004 there has not been: (a) any material adverse change in the financial condition, |
operations, properties, assets, liabilities or business of Trinity;
(b) any material damage, destruction or loss of any material properties of Trinity, whether or not covered by insurance;
(c) any change in the manner in which the business of Trinity has been conducted;
(d) any material change in the treatment and protection of trade secrets or other confidential information of Trinity; and
(e) any occurrence not included in paragraphs (a) through (d) of this Section which has resulted, or which Trinity has reason to believe, could reasonably be expected to result, in a Material Adverse Effect on Trinity.
4.17 BOOKS, RECORDS AND ACCOUNTS.
Trinity's books, records and accounts fairly and accurately reflect in all material respects transactions and dispositions of assets by Trinity, and to the Knowledge of Trinity, the system of internal accounting controls of Trinity is sufficient to assure that: (a) transactions are executed in accordance with management's authorization; (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and to maintain accountability for assets; (c) access to assets is permitted only in accordance with management's authorization; and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
4.18 DISCLOSURE CONTROLS.
Trinity has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act), which (i) are designed to ensure that material information relating to Trinity is made known to Trinity's principal executive officer and its principal financial officer by others within those entities, particularly during the preparation of the Proxy Statement; (ii) have been evaluated for effectiveness as of the date of this Agreement; and (iii) are effective in all material respects to perform the functions for which they were established.
4.19 ABSENCE OF MATERIAL WEAKNESSES.
Based on the evaluation of its internal controls over financial reporting, Trinity is not aware of (i) any significant deficiency or material weakness in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect Trinit"s ability to record, process, summarize and report financial information; or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls over financial reporting.
4.20 BROKERS AND FINDERS.
Except for HCFP/Brenner Securities LLC, Trinity has not employed any investment banker, broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement which would be entitled to any investment banking, brokerage, finder's or similar fee or commission in connection with this Agreement or the transactions contemplated hereby.
4.21 NO OMISSIONS OR UNTRUE STATEMENTS.
No representation or warranty made by Trinity to Adventure or the Adventure Shareholders in this Agreement, the Trinity Disclosure Schedule or in any certificate of a Trinity officer required to be delivered to Adventure or the Adventure Shareholders pursuant to the terms of this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein in light of the circumstances in which made not misleading as of the date hereof and as of the Closing Date.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME.
Each of Trinity, the Adventure Shareholders and Adventure, as applicable, hereby covenants and agrees as follows (and the Adventure Shareholders covenant and agree to cause Adventure to comply with such covenants and agreements), from and after the date of this Agreement and until the Effective Time, except as specifically consented to in writing by the other party or as set forth in Section 5.1 of the respective Disclosure Schedules:
(a) It shall conduct its business in the ordinary and usual course of business and consistent with past practice;
(b) It shall not (i) split, combine or reclassify its outstanding capital stock or declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, (ii) spin-off any assets or businesses, (iii) engage in any transaction for the purpose of effecting a recapitalization, or (iv) engage in any transaction or series of related transactions which has a similar effect to any of the foregoing;
(c) It shall not issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of its capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock or amend or modify the terms and conditions of any of the foregoing, provided, however, that it may issue shares upon exercise of outstanding options, warrants or stock purchase rights;
(d) It shall not (i) redeem, purchase, acquire or offer to
purchase or acquire any shares of its capital stock, other than as required by
the governing terms of such securities, (ii) take or fail to take any action
which action or failure to take action would cause it or its stockholders
(except to the extent that any stockholders receive cash in lieu of fractional
shares) to recognize gain or loss for Tax purposes as a result of the
consummation of the Merger, (iii) make any acquisition of any material assets
(except in the ordinary course of business) or businesses, (iv) sell any
material assets (except in the ordinary course of business) or businesses, or
(v) enter into any contract, agreement, commitment or arrangement to do any of
the foregoing;
(e) It shall use reasonable efforts to preserve intact its business organization and goodwill, keep available the services of its present officers and key employees, and preserve the goodwill and business relationships with suppliers, distributors, customers, and others having business relationships with it, and not engage in any action, directly or indirectly, with the intent to impact adversely the transactions contemplated by this Agreement;
(f) It shall confer on a regular basis with one or more representatives of the other to report on material operational matters and the general status of ongoing operations; and
(g) It shall file with the SEC all forms, statements, reports and documents (including all exhibits, amendments and supplements thereto) required to be filed by it pursuant to the Exchange Act.
5.2 NO SOLICITATION.
(a) Adventure and the Adventure Shareholders agree that, prior to the Effective Time or the termination or abandonment of this Agreement, that neither Adventure nor Adventure's Shareholders shall, and shall not give authorization or permission to any of Adventure's directors, officers, employees, agents or representatives to, and each shall use all reasonable efforts to see that such persons do not, directly or indirectly, solicit, initiate, facilitate or encourage (including by way of furnishing or disclosing information) any merger, consolidation, other business combination involving Adventure or any of the Subsidiaries, acquisition of all or any substantial portion of the assets or capital stock of Adventure or any of the Subsidiaries or inquiries or proposals concerning or which may reasonably be expected to lead to any of the foregoing (an "ADVENTURE ACQUISITION TRANSACTION") or negotiate, explore or otherwise knowingly communicate in any way with any third party (other than Trinity or its Affiliates) with respect to any Adventure Acquisition Transaction or enter into any agreement, arrangement or understanding requiring
Adventure or the Adventure Shareholders to abandon, terminate or fail to consummate the Merger or any other transaction expressly contemplated by this Agreement, or contemplated to be a material part thereof. Adventure or the Adventure Shareholders shall advise Trinity in writing of any BONA FIDE inquiries or proposals relating to any Adventure Acquisition Transaction within one business day following receipt by Adventure or any of the Adventure Shareholders of any such inquiry or proposal. Adventure or the Adventure Shareholders shall also promptly advise any person seeking an Adventure Acquisition Transaction that it is bound by the provisions of this Section 5.2(a).
(b) Trinity agrees that, prior to the Effective Time or the termination or abandonment of this Agreement, Trinity shall not give authorization or permission to any of its directors, officers, employees, agents or representatives to, and each shall use all reasonable efforts to see that such persons do not, directly or indirectly, solicit, initiate, facilitate or encourage (including by way of furnishing or disclosing information) any merger, consolidation, other business combination involving Trinity, acquisition of all or any substantial portion of the assets or capital stock of Trinity, or inquiries or proposals which may reasonably be expected to lead to any of the foregoing (a "TRINITY ACQUISITION TRANSACTION") or negotiate, explore or otherwise knowingly communicate in any way with any third party (other than the Adventure Shareholders) with respect to any Trinity Acquisition Transaction or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the Merger or any other transaction expressly contemplated by this Agreement, or contemplated to be a material part thereof. Trinity shall advise the Adventure Shareholders in writing of any BONA FIDE inquiries or proposals relating to a Trinity Acquisition Transaction, within one business day following Trinity's receipt of any such inquiry or proposal. Trinity shall also promptly advise any person seeking a Trinity Acquisition Transaction that it is bound by the provisions of this Section 5.2(b).
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1 ACCESS TO INFORMATION.
Each of Trinity and Adventure shall afford to the other and the other's accountants, counsel, financial advisors and other representatives reasonable access during normal business hours throughout the period prior to the Effective Time to all properties, books, contracts, commitments and records (including, but not limited to, Tax Returns) of it and, during such period, shall furnish promptly (a) a copy of each report, schedule and other document filed or received by it during such period pursuant to the requirements of federal or state securities laws or filed by it during such period with the SEC in connection with the transactions contemplated by this Agreement or which may have a Material Adverse Effect on it and (b) such other information concerning its business, properties and personnel as the other shall reasonably request; provided, however, that no investigation pursuant to this Section 6.1 shall affect any representation or warranty made herein or the conditions to the obligations of the respective parties to consummate the Merger. All non-public
documents and information furnished to Trinity, Adventure or the Adventure Shareholders, as the case may be, in connection with the transactions contemplated by this Agreement shall be deemed to have been received, and shall be held by the recipient, in confidence, except that Trinity and the Adventure Shareholders, as applicable, may disclose such information as may be required under applicable Law or as may be necessary in connection with the preparation of the Proxy Statement. Each party shall promptly advise the others, in writing, of any change or the occurrence of any event after the date of this Agreement and prior to the Effective Time having, or which, insofar as can reasonably be foreseen, in the future would reasonably be expected to have, any Material Adverse Effect on Adventure or Trinity, as applicable.
6.2 ADVENTURE REGISTRATION STATEMENT.
(a) Adventure covenants and agrees to file with the SEC as soon as shall be reasonably practicable following the date of this Agreement (provided Trinity shall have supplied Adventure with the Proxy Statement to be included therein), at its sole cost and expense, a registration statement on Form F-1/F-4 or comparable form (the "ADVENTURE REGISTRATION STATEMENT") which shall include a joint proxy statement/prospectus (the "PROXY STATEMENT") relating to the solicitation of the Trinity Stockholders' Approval of, and covering the issuance of the Adventure Shares in, the Merger, the Adventure Exchange Securities and the shares of Adventure common stock underlying the Adventure Exchange Securities. Adventure shall use all reasonable best efforts to have the Adventure Registration Statement declared effective by the SEC as promptly as practicable thereafter. Adventure shall also take any action (other than qualifying to do business in any jurisdiction in which it is not now so qualified or to file a general consent to service of process) required to be taken under any applicable state securities Laws in connection with the issuance of Adventure Shares and the Adventure Exchange Securities in the Merger. No filing of, or amendment or supplement to, or correspondence to the SEC or its staff with respect to, the Adventure Registration Statement or the Proxy Statement will be made by Adventure, without providing Trinity a reasonable opportunity to review and comment thereon. Adventure will advise Trinity, promptly after it receives notice thereof, of the time when the Adventure Registration Statement has become effective or any supplement or amendment has been filed to the Adventure Registration Statement or the Proxy Statement, the issuance of any stop order, the suspension of the qualification of Adventure Shares issuable in connection with the Merger for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Adventure Registration Statement, the Proxy Statement or comments thereon and responses thereto or requests by the SEC for additional information. If at any time prior to the Effective Time any information relating to Trinity or Adventure, or any of their respective Affiliates, officers or directors, should be discovered by Trinity or Adventure which should be set forth in an amendment or supplement to any of the Adventure Registration Statement or the Proxy Statement, so that any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by law, disseminated to the stockholders of Trinity.
(b) Trinity and Adventure shall promptly furnish to each other all information, and take such other actions, as may reasonably be requested in connection with any action by any of them in connection with the preparation and filing of the Adventure Registration Statement and the Proxy Statement and shall cooperate with one another and use their respective best efforts to facilitate the expeditious consummation of the transactions contemplated by this Agreement.
6.3 SEC FILINGS BY TRINITY.
Trinity shall file with the SEC, as soon as reasonably practicable following the filing of the Adventure Registration Statement, any document required to be filed by it in connection with the Merger and the Trinity Stockholders' Approval contemplated by this Agreement, including, without limitation, any documents required under the SEC's Regulation 14A.
6.4 STOCKHOLDERS' APPROVAL.
Trinity shall use its reasonable best efforts to obtain Trinity Class B stockholder approval and adoption (including having less than 20% of Trinity Class B stockholders exercise their conversion rights) (collectively, the "TRINITY STOCKHOLDERS' APPROVAL") of this Agreement and the transactions contemplated hereby, as soon as practicable in accordance with applicable Delaware law and the Trinity Bylaws following the date upon which the Adventure Registration Statement is declared effective by the SEC. Trinity shall, through its board of directors, recommend to the holders of Trinity Common Stock approval of this Agreement and the transactions contemplated by this Agreement. Lawrence Burstein, James Scibelli, David Buckel and Theodore Kesten (the "TRINITY DIRECTORS"), in their capacities as members of the board of directors of Trinity but subject to their fiduciary duty to the stockholders of Trinity, in connection with the solicitation of proxies pursuant to the Proxy Statement, shall unanimously recommend the approval and adoption of the Merger and this Agreement by the stockholders of Trinity.
6.5 STOCK EXCHANGE LISTING/EXCHANGE ACT LISTING.
Trinity and Adventure shall each use its reasonable best efforts to file, at or before the Effective Time, authorization for listing of the Adventure Shares and the Adventure Exchange Securities on the NASDAQ SmallCap Market, The American Stock Exchange Inc. or, if permissible, the NASDAQ National Market (the "STOCK EXCHANGE LISTING"). In addition, Adventure shall, as soon as reasonably practicable, file a registration statement under the Exchange Act and use its reasonable best efforts to cause the SEC to declare such registration statement effective with respect to the listing of the Adventure Shares issued in the Merger, the Adventure Exchange Securities and the shares of Adventure common stock underlying the Adventure Exchange Securities (the "EXCHANGE ACT LISTING").
6.6 TRINITY WARRANTS AND TRINITY OPTIONS.
At the Effective Time, Adventure shall assume each Trinity Warrant and
Trinity Option in accordance with the terms of the agreement under which it was
issued and all rights with respect to Trinity Capital Stock under each Trinity
Warrant and Trinity Option then outstanding shall be converted into and become
warrants and options in Adventure (the "ADVENTURE EXCHANGE SECURITIES").
Accordingly, after the Effective Time, each holder of Adventure Exchange
Securities at the time of exercise sh all receive a number of Adventure Shares
(rounded up to the nearest whole share) equal to the number of shares of Trinity
Common Stock subject to such Trinity Warrant or Trinity Option immediately prior
to the Effective Time multiplied by the Exchange Ratio at an exercise price per
Adventure Share (rounded up to the nearest whole cent) equal to the exercise
price in effect prior to the Effective Time divided by the Exchange Ratio. The
Adventure Exchange Securities shall contain the same terms, conditions and
restrictions that were applicable to the Trinity Warrants and Trinity Options.
Prior to the Effective Time, Adventure shall take all necessary action to assume
as of the Effective Time all obligations undertaken by Adventure under this
Section 6.6, including the reservation, issuance and listing of a number of
Adventure Shares at least equal to the number of Adventure Shares subject to the
assumed Trinity Warrants and Trinity Options.
6.7 AGREEMENT TO COOPERATE.
Subject to the terms and conditions herein provided, each of the parties hereto shall cooperate and use their respective best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including using its reasonable efforts to obtain all necessary or appropriate waivers, consents and approvals to effect all necessary registrations, filings and submissions and to lift any injunction or other legal bar to the Merger (and, in such case, to proceed with the Merger as expeditiously as possible), subject, however, to obtaining the Trinity Stockholders' Approval; and provided that nothing in this Section 6.7 shall affect any responsibility or obligation specifically allocated to any party in this Agreement.
6.8 PUBLIC STATEMENTS.
The parties shall consult with each other prior to issuing any press release or any written public statement with respect to this Agreement or the transactions contemplated hereby. Trinity shall not issue any such press release or any other public statement with respect to this Agreement or the transactions contemplated hereby absent the prior written consent of the Adventure Shareholders (which consent shall not be unreasonably withheld or delayed), except that such prior written consent shall not be required if, in the reasonable judgment of Trinity based upon the advice of counsel, seeking and obtaining prior written consent would prevent the timely dissemination of such release or statement in violation of the Exchange Act or other applicable Law or Order.
6.9 CORRECTIONS TO THE PROXY STATEMENT AND THE ADVENTURE REGISTRATION STATEMENT.
Prior to the Closing Date, each of Adventure and the Adventure Shareholders and Trinity shall correct promptly any information provided by it to be used specifically in the Proxy Statement and the Adventure Registration Statement that shall have become false or misleading in any material respect and shall take all steps necessary to file with the SEC and have cleared by the SEC any amendment or supplement to the Proxy Statement and the Adventure Registration Statement so as to correct the same and to cause appropriate dissemination thereof to the stockholders of Trinity, to the extent required by applicable Law.
6.10 DISCLOSURE SUPPLEMENTS.
From time to time prior to the Closing Date, and in any event immediately prior to the Closing Date, each of Trinity, Adventure and the Adventure Shareholders shall promptly supplement or amend its Disclosure Schedule with respect to any matter hereafter arising that, if existing, occurring or known at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or that is necessary to correct any information in such Disclosure Schedule that is or has become inaccurate. Notwithstanding the foregoing, if any such supplement or amendment discloses a Material Adverse Effect, the conditions to the other party's obligations to consummate the Merger set forth in Article VII hereof shall be deemed not to have been satisfied.
6.11 POST-CLOSING BOARD OBSERVATION RIGHTS.
For a period of one (1) year following the Closing Date, the Trinity Directors shall have the right to send a representative to observe each meeting of the board of directors of Adventure. Absent his illness or unavailability, Larry Burstein shall be the designated representative for such purpose. During such period, such representative shall be provided by Adventure with written notice of each such meeting sufficiently in advance thereof to permit attendance thereat, and an agenda and minute thereof. Adventure shall reimburse such representative for his reasonable out-of-pocket expenses incurred in connection with his attendance at each such meeting, including, but not limited to, the cost of transportation, lodging and food.
6.12 EMPLOYMENT AGREEMENTS.
Each of G. Gourdomichalis, S. Gourdomichalis and Varouxakis shall enter into employment agreements with Adventure on terms reasonably satisfactory to Trinity (the "EMPLOYMENT AGREEMENTS").
6.13 ASSIGNMENT BY ADVENTURE SHAREHOLDERS.
The parties hereby agree that V Capital and G Bros may transfer and assign all but not less than all of their shares in Adventure each to another company prior to the filing of the Adventure Registration Statement, provided that with respect to any such company (a) one or more of G. Gourdomichalis, S.
Gourdomichalis and Varouxakis are the sole registered and beneficial shareholders of such company and (b) at least ten (10) days' prior written notice shall have been given to Trinity. In the case of any such permitted transfer and assignment, the transferee or assignee shall execute a counterpart signature page to this Agreement, shall be an Adventure Shareholder for all purposes of this Agreement, shall be deemed to have made all of the representations, warranties and covenants of an Adventure Shareholder hereunder and shall have all the rights and obligations of an Adventure Shareholder under this Agreement.
ARTICLE VII.
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be subject to the fulfillment at or prior to the Closing Date of the following conditions:
(a) Trinity shall have obtained the Trinity Stockholders' Approval;
(b) The Adventure Registration Statement shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order;
(c) The Adventure Shares issuable to Trinity's stockholders, the Adventure Exchange Securities and the stock issuable upon exercise thereof shall have been approved for the Stock Exchange Listing and the Exchange Act Listing, subject to any notice of issuance or similar requirement.
(d) No preliminary or permanent injunction or other order or decree by any Governmental Authority which prevents or materially burdens the consummation of the Merger shall have been issued and remain in effect (each party agreeing to use its reasonable efforts to have any such injunction, order or decree lifted);
(e) No action shall have been taken, and no statute, rule or regulation shall have been enacted, by any Governmental Authority, which would prevent or materially burden the consummation of the Merger;
(f) All consents, orders and approvals legally required for the consummation of the Merger and the transactions contemplated hereby shall have been obtained and be in effect at the Effective Time without any material limitations or conditions.
7.2 CONDITIONS TO OBLIGATIONS OF ADVENTURE AND THE ADVENTURE SHAREHOLDERS TO EFFECT THE MERGER.
Unless waived by the Adventure Shareholders, the obligation of the Adventure Shareholders to effect the Merger shall also be subject to the fulfillment at or prior to the Closing Date of the following additional conditions:
(a) Trinity shall have performed in all material respects its agreements contained in this Agreement required to be performed on or prior to the Closing Date and the representations and warranties of Trinity contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties which are themselves limited by a reference to materiality, which shall be true and correct in all respects other than as modified) on and as of (i) the date made and (ii) the Closing Date (in each case except in the case of representations and warranties expressly made solely with reference to a particular date which shall be true and correct in all material respects as of such date); and Adventure and the Adventure Shareholders shall have received a certificate of the president of Trinity to that effect;
(b) Adventure shall have received an opinion from Seward & Kissel LLP, counsel to Trinity, dated the Closing Date, in form and substance reasonably satisfactory to Adventure, which shall include, among other things, an opinion that there will not be any recognition of gain to Trinity or Trinity stockholders upon consummation of the Merger;
(c) Adventure shall have received a "comfort" letter from J.H. Cohn LLP, independent public accountants for Trinity, dated the date of the Proxy Statement and the Closing Date (or such other date reasonably acceptable to Adventure) with respect to certain financial statements of Trinity and other related financial information included in the Proxy Statement in customary form;
(d) Since the date of this Agreement there shall not have been any Material Adverse Effect with respect to Trinity, the likelihood of which was not previously disclosed to Adventure and the Adventure Shareholders by Trinity in the Trinity Disclosure Schedule or contemplated by this Agreement and Trinity shall have engaged in no business activity since the date of its incorporation other than conducting a public offering of its securities and, thereafter, seeking to effect a merger or similar business combination with an operating business;
(e) Adventure shall have received a certificate from the corporate Secretary of Trinity, together with a certified copy of the resolutions duly authorized by Trinity's board of directors authorizing the Merger and, if applicable, the transactions contemplated by this Agreement;
(f) Adventure shall have received a certificates of good standing for Trinity from the Secretary of State of the State of Delaware dated as of a date that is within five (5) days of the Closing Date;
(g) Trinity shall have furnished to the Adventure Shareholders such additional certificates and other customary closing documents as Adventure and the Adventure Shareholders may have reasonably requested as to any of the conditions set forth in this Section 7.2;
(h) At the Effective Time, Trinity shall have approximately $7,350,000 but not less than $7,000,000 in cash or cash equivalents after giving effect to (a) the payment or accrual on or prior to the Effective Time of all expenses incurred by Trinity, including, but not limited to, the fees and expenses of Trinity's attorneys, accountants and investment bankers (including HCFP/Brenner Securities) LLC, and (b) any payments to be made to dissenting Trinity stockholders, in connection with the transactions contemplated by this Agreement;
(i) At Closing, the Trinity capitalization shall be unchanged from that set forth in Section 4.2 (other than to reflect issuances, if any, of Trinity Common Stock upon exercises prior to the Effective Time of Trinity's Class W Warrants and/or Trinity Class Z Warrants);
(j) Adventure and the Adventure Shareholders shall have received a letter agreement signed by each officer and director of Trinity (collectively, the "TRINITY PRINCIPALS"), in form and substance satisfactory to Adventure, the Adventure Shareholders and Trinity ("LOCK-UP AGREEMENTS");
(k) Adventure and the Adventure Shareholders shall have received written resignations from each of Trinity's directors and officers and which resignations, by their respective terms, shall become effective immediately prior to the Effective Time;
(l) Trinity shall have conducted the operation of its business in material compliance with all applicable Laws and all approvals required of Trinity under applicable law to enable Trinity to perform its obligations under this Agreement shall have been obtained; and
(m) All corporate proceedings of Trinity in connection with the Merger and the other transactions contemplated by this Agreement and all agreements, instruments, certificates, and other documents delivered to the Adventure Shareholders by or on behalf of Trinity pursuant to this Agreement shall be reasonably satisfactory to Adventure and the Adventure Shareholders and their counsel.
7.3 CONDITIONS TO OBLIGATIONS OF TRINITY TO EFFECT THE MERGER.
Unless waived by Trinity, the obligations of Trinity to effect the Merger shall also be subject to the fulfillment at or prior to the Closing Date of the additional following conditions:
(a) Adventure and the Adventure Shareholders shall have performed in all material respects their agreements contained in this Agreement required to be performed on or prior to the Closing Date and the representations and warranties of Adventure and the Adventure Shareholders contained in this
Agreement shall be true and correct in all material respects (except for those representations and warranties which are themselves limited by a reference to materiality, which shall be true and correct in all respects, other than as modified) on and as of (i) the date made and (ii) the Closing Date (in each case except in the case of representations and warranties expressly made solely with reference to a particular date which shall be true and correct in all material respects as of such date); and Trinity shall have received a Certificate of each of the Adventure Shareholders and of the president of Adventure to that effect;
(b) Trinity shall have received an opinion from Broad and Cassel, dated the Closing Date, in form and substance reasonably satisfactory to Trinity;
(c) Trinity shall have received a "comfort" letter from PriceWaterhouseCoopers LLP, independent certified public accountants for Adventure, dated the date of the Proxy Statement and the Closing Date (or such other date reasonably acceptable to Trinity) with respect to certain financial statements of Adventure and other related financial information included in the Proxy Statement in customary form;
(d) Trinity shall have received:
(1) A Certificate of Ownership and Encumbrance issued by the Office of the Maritime Administrator, Republic of the Marshall Islands, dated not more than five (5) Business Days prior to the Closing, confirming that Adventure Two S.A. is the owner of the Free Destiny free and clear of any Lien other than as disclosed in Section 3.9(b) of the Adventure Disclosure Schedule;
(2) A Certificate of Ownership and Encumbrance issued by the Office of the Maritime Administrator, Republic of the Marshall Islands, dated not more than five (5) Business Days prior to the Closing, confirming that Adventure Three S.A. is the owner of the Free Envoy free and clear of any Lien other than as disclosed in Section 3.9(b) of the Adventure Disclosure Schedule;
(3) A certificate by Lloyds dated not more than ten
(10) Business Days prior to the Closing, to the effect that the
Free Destiny is in class without overdue recommendation;
(4) A certificate by the Korean Register of Shipping dated not more than ten (10) Business Days prior to the Closing, to the effect that the Free Envoy is in class without overdue recommendation; and
(5) Facsimile advice, dated the Closing Date, from one or more protection and indemnity insurance clubs for the effect that each of the Vessels is or are entered therein, as applicable, as of that date.
(e) At Closing, Adventure's capitalization shall be unchanged from that as set forth in Section 3.3;
(f) Trinity shall have received a certificate of the corporate Secretary of Adventure together with a certified copy of the resolutions duly authorized by the board of directors and Adventure Shareholders authorizing the Merger and the transactions contemplated by this Agreement;
(g) Trinity shall have received a certificate of good standing for Adventure from the Registrar of Corporations of the Republic of the Marshall Islands dated as of a date that is within five (5) days of the Closing Date;
(h) Adventure and the Adventure Shareholders shall have furnished to Trinity such additional certificates and other customary closing documents as Trinity may have reasonably requested as to any of the conditions set forth in this Section 7.3;
(i) Since the date of this Agreement there shall not have been any Material Adverse Effect with respect to Adventure, the likelihood of which was not previously disclosed to Trinity by Adventure and the Adventure Shareholders;
(j) Trinity shall have received Lock-Up Agreements from each Adventure Shareholder;
(k) The Employment Agreements shall have been executed;
(l) Adventure, V Capital and G Bros (or their permitted transferees or assignees under Section 6.13 above), Adventure Two S.A and Adventure Three S.A. shall have each amended their respective Articles of Incorporation and By-laws on terms reasonably satisfactory to Trinity, including, but not limited to, removing any ability of such company to issue bearer shares, and such documents shall be in full force and effect;
(m) Adventure shall be the sole registered and beneficial shareholder of Adventure Two S.A. and Adventure Three S.A.;
(n) V Capital and G Bros (or their permitted transferees or assignees under Section 6.13 above) shall be the sole registered and beneficial shareholders of Adventure;
(o) ONE OR MORE OF G. Gourdomichalis, S. Gourdomichalis and Varouxakis shall be the sole registered and beneficial shareholders of V Capital and G Bros (or their permitted transferees or assignees under Section 6.13 above);
(p) All corporate proceedings of Adventure and the Adventure Shareholders in connection with the Merger and the other transactions contemplated by this Agreement and all agreements, instruments, certificates and other documents delivered to Trinity by or on behalf of Adventure and the Adventure Shareholders pursuant to this Agreement shall be in substantially the form called for hereunder or otherwise reasonably satisfactory to Trinity and its counsel.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Closing Date, whether before or after approval by the stockholders of Trinity:
(a) by mutual consent in writing of Trinity and the Adventure Shareholders;
(b) unilaterally upon written notice by Trinity to the Adventure Shareholders upon the occurrence of a Material Adverse Effect with respect to Adventure, the likelihood of which was not previously disclosed to Trinity in writing by the Adventure Shareholders prior to the date of this Agreement;
(c) unilaterally upon written notice by the Adventure Shareholders to Trinity upon the occurrence of a Material Adverse Effect with respect to Trinity, the likelihood of which was not previously disclosed to the Adventure Shareholders in writing by Trinity prior to the date of this Agreement;
(d) unilaterally upon written notice by Trinity to the Adventure Shareholders in the event a material breach of any material representation or warranty of Adventure or the Adventure Shareholders contained in this Agreement (unless such breach shall have been cured within ten (10) days after the giving of such notice by Trinity), or the willful failure of Adventure or the Adventure Shareholders to comply with or satisfy any material covenant or condition of Adventure or the Adventure Shareholders contained in this Agreement;
(e) unilaterally upon written notice by the Adventure Shareholders to Trinity in the event of a material breach of any material representation or warranty of Trinity contained in this Agreement (unless such breach shall have been cured by Trinity within ten (10) days after the giving of such notice by the Adventure Shareholders), or Trinity's willful failure to comply with or satisfy any material covenant or condition of Trinity contained in this Agreement, or if Trinity fails to obtain the Trinity Stockholders' Approval; or
(f) unilaterally upon written notice by either Trinity or the Adventure Shareholders to the other if the Merger is not consummated for any reason not specified or referred to in the preceding provisions of this Section 8.1 by the close of business on July 31, 2005.
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either Trinity or the Adventure Shareholders, as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no further obligation on the part of
either Adventure and the Adventure Shareholders or Trinity (except as set forth in the penultimate sentence of Section 6.1 (with respect to confidential and nonpublic information) and Section 8.5, which shall survive such termination). Nothing in this Section 8.2 shall relieve any party from liability for any breach of this Agreement.
8.3 AMENDMENT.
This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto and in compliance with applicable law.
8.4 WAIVER.
At any time prior to the Effective Time, the parties hereto may (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
8.5 EXPENSES.
Whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, except as otherwise specifically provided for herein.
ARTICLE IX.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The respective representations, warranties, obligations, agreements and promises of the parties contained in this Agreement and in any exhibit, schedule, certificate or other document delivered pursuant to this Agreement, shall survive for a period of one year following the Closing Date.
9.2 INDEMNIFICATION BY ADVENTURE AND ADVENTURE SHAREHOLDERS.
(a) Adventure and each Adventure Shareholder hereby agrees to indemnify and hold harmless Trinity and the Trinity stockholders (in the aggregate, in proportion to each such Trinity stockholder's ownership of the capital stock of Adventure, on a fully diluted basis) and each of their Affiliates and their respective fiduciaries, directors, officers, controlling persons, representatives and agents against and hold them harmless from any loss, liability, claim, damage or expense (including reasonable legal fees and
expenses and costs of investigation) (a "LOSS") arising, directly or indirectly, out of or in connection with (i) any breach of any representation or warranty of Adventure or the Adventure Shareholders contained in this Agreement, or (ii) any breach of any covenant or agreement of Adventure or the Adventure Shareholders contained in this Agreement.
(b) Trinity hereby agrees to indemnify and hold harmless Adventure and the Adventure Shareholders (in the aggregate, in proportion to each such Adventure Shareholder's ownership of the capital stock of Adventure, on a fully diluted basis) and each of their Affiliates and their respective fiduciaries, directors, officers, controlling persons, representatives and agents against and hold them harmless from any Loss arising, directly or indirectly, out of or in connection with (i) any breach of any representation or warranty of Trinity contained in this Agreement, or (ii) any breach of any covenant or agreement of Trinity contained in this Agreement.
9.3 THIRD-PARTY CLAIMS.
(a) If any party entitled to be indemnified hereunder (an "INDEMNIFIED PARTY") receives notice of the assertion of any claim in respect of Losses, such Indemnified Party shall give the party who may become obligated to provide indemnification hereunder (the "INDEMNIFYING PARTY") written notice describing such claim or fact in reasonable detail (the "NOTICE OF CLAIM") promptly (and in any event within ten (10) Business Days after receiving any written notice from a third party). The failure by the Indemnified Party to timely provide a Notice of Claim to the Indemnifying Party shall not relieve the Indemnifying Party of any liability, except to the extent that the Indemnifying Party is prejudiced by the Indemnified Party's failure to provide timely notice hereunder.
(b) In the event any Indemnifying Party notifies the Indemnified Party within ten (10) Business Days after the Indemnified Party has given notice of the matter that the Indemnifying Party is assuming the defense thereof: (i) the Indemnifying Party will defend the Indemnified Party against the matter with counsel of its choice reasonably satisfactory to the Indemnified Party; (ii) the Indemnified Party may retain separate co-counsel at its sole cost and expense (except that the Indemnifying Party will be responsible for the fees and expenses of the separate co-counsel to the extent the Indemnified Party reasonably concludes that the counsel the Indemnifying Party has selected has a conflict of interest); (iii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the matter without the written consent of the Indemnifying Party which consent shall not be unreasonably withheld; and (iv) the Indemnifying Party will not consent to the entry of any judgment with respect to the matter, or enter into any settlement which does not include a provision whereby the plaintiff or claimant in the matter releases the Indemnified Party from all liability with respect thereto, and, in a settlement or compromise which does not involve only the payment of money by the Indemnifying Party, without the prior written consent of the Indemnified Party which consent shall not be unreasonably withheld.
(c) In the event the Indemnifying Party does not notify the Indemnified Party within ten (10) Business Days after the Indemnified Party has received a Notice of Claim that the Indemnifying Party is assuming the defense thereof, then the Indemnified Party shall have the right, subject to the
provisions of this Article IX, to undertake the defense, compromise or settlement of such claim for the account of the Indemnifying Party. Unless and until the Indemnifying Party assumes the defense of any claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advance that, in the event it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that it was not entitled to indemnification under this Article IX.
(d) In the event that the Indemnifying Party undertakes the defense of any claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith.
ARTICLE X. GENERAL PROVISIONS 10.1 NOTICES. All notices and other communications hereunder shall be in writing and |
shall be deemed given if delivered personally (effective upon delivery), sent by a reputable overnight courier service for next business day delivery (effective the next business day) or sent via facsimile (effective upon receipt of the telecopy in complete, readable form) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
(a) If to Trinity to:
Trinity Partners Acquisition Company, Inc.
245 Fifth Avenue
New York, New York 10016
Attention: President
FAX: (212) 582-3293
with a copy to:
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
Attention: Derick W. Betts, Esq.
FAX: (212) 480-8421
(b) If to Adventure Holdings S.A. or to the Adventure Shareholders, to:
c/o Adventure Holdings, S.A.
93 Akti Miaouli
Piraeus, Greece
FAX: +30-210-429010
with a copy to:
Broad and Cassel
201 S. Biscayne Boulevard
Suite 300
Miami, Florida 33131
Attention: A. Jeffry Robinson, Esq.
FAX: (305) 995-6402
10.2 INTERPRETATION.
The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
10.3 MISCELLANEOUS.
This Agreement (including the documents and instruments referred to
herein) (i) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof (including without limitation
that certain letter of intent dated January 10, 2005 between Trinity, Adventure
and the Adventure Shareholders); (ii) shall not be assigned by contract,
operation of law or otherwise, and any attempt to do so shall be void, except
that the rights and obligations of the Adventure Shareholders hereunder shall be
assigned to any transferee or assignee permitted under Section 6.13 above; and
(iii) shall be governed in all respects, including validity, interpretation and
effect, by the laws of the State of New York (without giving effect to the
provisions thereof relating to conflicts of law).
10.4 SUBMISSION TO JURISDICTION.
Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan in The City of New York and of the United States District Court for the Southern District of New York sitting in the Borough of Manhattan in The City of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any matter set forth in this Agreement, and each of the parties hereto hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such New York State or
Federal court. Adventure and the Adventure Shareholders hereby irrevocably waive, to the fullest extent that they may legally do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. Adventure and the Adventure Shareholders irrevocably consent to the service of any and all process in any action or proceeding by the delivery of copies of such process to it at its notice address in Section 10.1. Adventure and the Adventure Shareholders agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
10.5 WAIVER OF JURY TRIAL.
THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY (BUT NO OTHER JUDICIAL REMEDIES) IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
10.6 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. In pleading or proving this Agreement, it shall not be necessary to produce or account for more than one fully executed original.
10.7 BENEFITS OF AGREEMENT.
Nothing in this Agreement, expressed or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, and the
stockholders of Trinity, any benefit or any legal or equitable right, remedy or
claim under this Agreement, except that the holders of Trinity Capital Stock on
the Closing Date shall be third party beneficiaries of Article IX of this
Agreement and (ii) the Trinity Principals shall be third party beneficiaries of
Section 6.3 and Article IX of this Agreement.
10.8 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement, except as otherwise provided in
Section 10.7 of this Agreement.
10.9 CAPTIONS.
The captions of sections and subsections of this Agreement are for reference only, and shall not affect the interpretation or construction of this Agreement.
IN WITNESS WHEREOF, Trinity, Adventure and the Adventure Shareholders have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.
TRINITY PARTNERS ACQUISITION
COMPANY, INC.
By: /s/ Lawrence Burstein ---------------------------------- Name: Lawrence Burstein Title: President |
ADVENTURE HOLDINGS, S.A.
By: /s/ George D. Gourdomichalis ---------------------------------- Name: George D. Gourdomichalis Title: President |
V CAPITAL S.A.
By: /s/ Ion G. Varouxakis ---------------------------------- Name: Ion G. Varouxakis Title: President |
G BROS S.A.
By: /s/ George D. Gourdomichalis ---------------------------------- Name: George D. Gourdomichalis Title: President /s/ George D. Gourdomichalis ------------------------------------- George D. Gourdomichalis /s/ Stathis D. Gourdomichalis -------------------------------------- Stathis D. Gourdomichalis /s/ Ion G. Varouxakis -------------------------------------- Ion G. Varouxakis |
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
ADVENTURE HOLDINGS S.A. (THE "CORPORATION")
PURSUANT TO SECTION 90 OF
THE MARSHALL ISLANDS BUSINESS CORPORATIONS ACT
I, George D. Gourdomichalis, the President, of Adventure Holdings S.A., for the purpose of amending and restating the Articles of Incorporation of said Corporation hereby certify:
1. The name of the Corporation is: Adventure Holdings S.A.
2. The Articles of Incorporation were filed with the Registrar of Corporations as of the 23rd day of April 2004.
3. The Articles of Incorporation are hereby amended and restated in their entirety as follows:
A. The name of the Corporation shall be:
FREESEAS INC.
B. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act (the "BCA") and without in any way limiting the generality of the foregoing, and unless otherwise stated in these Articles or the Corporation's By-Laws, the corporation shall have those powers enumerated in Section 15 of the BCA.
C. The registered address of the Corporation in the Marshall Islands is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands. The name of the Corporation's registered agent at such address is The Trust Company of the Marshall Islands, Inc.
D. The aggregate number of shares of capital stock that the Corporation shall have the authority to issue is forty- five million (45,000,000) consisting of the following:
(1) The Corporation is authorized to issue forty million (40,000,000) registered shares of common stock with a par value of US $.001 per share.
(2) The Corporation is authorized, without further vote or action by the shareholders, to issue five million (5,000,000) registered preferred shares with a par value of US$.001 per share. The Board of Directors (the "Board") shall have the authority to establish such series of preferred shares and
with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions as shall be stated in the resolutions providing for the issue of such preferred shares.
E. No holder of shares of the Corporation shall, by reason thereof, have any preemptive or other preferential right to acquire, by subscription or otherwise, any unissued or treasury stock of the Corporation, or any other share of any class or series of the Corporation's shares to be issued because of an increase in the authorized capital stock of the Corporation, or any bonds, certificates of indebtedness, debentures or other securities convertible into shares of the Corporation. However, the Board may issue or dispose of any such unissued or treasury stock, or any such additional authorized issue of new shares or securities convertible into shares upon such terms as the Board may, in its discretion, determine, without offering to shareholders then of record, or any class of shareholders, any thereof, on the same terms or any terms.
F. The Corporation shall have every power which a corporation now or hereafter organized under the BCA may have.
G. The name and address of the incorporator is: NAME POST OFFICE ADDRESS Majuro Nominees, Ltd. P.O. Box 1405 Majuro Marshall Islands |
H. The Board of the Corporation shall consist of such number of directors, not less than three, as shall be determined from time to time by the Board by a vote of not less than 66?% of the directors then in office. No decrease in the number of directors shall shorten the term of any incumbent director. Directors need not be residents of the Marshall Islands or shareholders of the Corporation.
The Board shall divide the directors into three classes; namely, Class A, Class B and Class C, which shall be as nearly equal in number as possible and shall designate directors as Class A, Class B or Class C directors. The initial term of office of each class of directors shall be as follows: the directors first designated as Class A directors shall serve for a term expiring at the 2006 annual meeting of the shareholders, the directors first designated as Class B directors shall serve for a term expiring at the 2007 annual meeting, and the directors first designated as Class C directors shall serve for a term expiring at the 2008 annual meeting. At each annual meeting after such initial term, directors to replace those whose terms expire at such annual meeting shall be elected to hold office until the third succeeding annual meeting.
Each director shall serve his respective term of office until his successor shall have been elected and qualified, except in the event of his earlier resignation, removal or death. Cumulative voting, as defined in Section 71(2) of the BCA, shall not be used to elect directors.
The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by the provisions of subsection (m) of Section 29 of the BCA, as the same may be amended and/or supplemented.
Except as otherwise provided by applicable law, rules or
regulations, any or all of the directors may be removed with
cause by the affirmative vote of holders of at least 66? of
the issued and outstanding voting shares of the Corporation.
Any director may be removed for cause by action of the Board.
No director may be removed without cause by either the
shareholders or the Board. Except as otherwise provided by
applicable law, cause for the removal of a director shall be
deemed to exist only if the director whose removal is
proposed: (i) has been convicted, or has been granted immunity
to testify in any proceeding in which another has been
convicted, of a felony by a court of competent jurisdiction
and that conviction is no longer subject to direct appeal;
(ii) has been found to have been negligent or guilty of
misconduct in the performance of his duties to the Corporation
in any matter of substantial importance to the Corporation by
(A) the affirmative vote of at least 80% of the directors then
in office, other than the director whose removal is being
sought, at any meeting of the Board called for that purpose or
(B) a court of competent jurisdiction; or (iii) has been
adjudicated by a court of competent jurisdiction to be
mentally incompetent, which mental incompetence directly
affects his ability to serve as a director of the Corporation.
No proposal by a shareholder to remove a director shall be
voted upon at a meeting of the shareholders unless such
shareholder has given timely notice thereof in proper written
form to the Secretary. To be timely, a shareholder's notice to
the Secretary must be delivered to or mailed and received at
the principal executive offices of the Corporation not less
than one hundred and twenty (120) days nor more than one
hundred eighty (180) days prior to the one year anniversary of
the mailing date of the proxy materials for the immediately
preceding annual meeting of shareholders or any such later
deadline as may be required in the rules promulgated by the
Unites States of America Securities and Exchange Commission
(the "SEC") pursuant to the Securities Exchange Act of 1934,
as amended, regarding the solicitation of proxies. To be in
proper written form, a shareholder's notice must set forth:
(a) a statement of the grounds, if any, on which such director
is proposed to be removed, (b) evidence reasonably
satisfactory to the Secretary, of such shareholder's status as
such and of the number of shares of each class of capital
stock of the Corporation beneficially owned by such
shareholder, and (c) a list of the names and addresses of
other shareholders of the Corporation, if any, with whom such
shareholder is acting in concert, and the number of shares of
each class of capital stock of the Corporation beneficially
owned by each such shareholder.
No shareholder proposal to remove a director shall be voted upon at an annual meeting of the shareholders unless proposed in accordance with the procedures set forth in this Section H. If the Chairman of the meeting determines, based on the facts, that a shareholder proposal to remove a director was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that a proposal to remove a director of the Corporation was not made in accordance with the procedures prescribed by these Articles, and such defective proposal shall be disregarded.
All of the foregoing provisions of this Section H are subject to the terms of any preferred stock with respect to the directors to be elected solely by the holders of such preferred stock.
Notwithstanding any other provisions of these Articles of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Articles of Incorporation or the By-Laws of the Corporation), the affirmative vote of the holders of 66?% of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article H.
I. The Board of the Corporation, by a vote of not less than a majority of the directors then in office, may make, alter, amend or repeal by-laws. By the affirmative vote of the holders of 66?% of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, the Corporation's Shareholders may make, alter, amend or repeal the Corporation's Bylaws even though the Bylaws may also be altered, amended or repealed by its Board and may alter, amend or repeal any Bylaw adopted by the Corporation's Board. In addition, the Shareholders, in making, altering, amending or repealing the Bylaws generally or a particular Bylaw, may expressly provide that the Board may not alter, amend or repeal the Bylaws or that Bylaw. Notwithstanding any other provisions of these Articles of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Articles of Incorporation or the By-Laws of the Corporation), the affirmative vote of the holders of 66?% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article I.
J. The Corporation may transfer its corporate domicile from the Marshall Islands to any other place in the world.
4. These Amended and Restated of the Articles of Incorporation were approved by the unanimous vote of the shareholders of the Corporation.
IN WITNESS WHEREOF, I have executed these Amended and Restated Articles of Incorporation on this 26th day of April, 2005.
/s/ George D. Gourdomichalis ----------------------------------- George D. Gourdomichalis, President |
EXHIBIT 3.2
FREESEAS INC. (THE "CORPORATION")
(F/K/A ADVENTURE HOLDINGS, S.A.)
AMENDED AND RESTATED BY-LAWS
As Adopted _______________, 2005
ARTICLE I
OFFICES
The principal place of business of the Corporation shall be at such place or places as the Board of Directors (the "Board") shall from time to time determine. The Corporation may also have an office or offices at such other places within or without the Marshall Islands as the Board may from time to time appoint or the business of the Corporation may require.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING: The annual meeting of shareholders of the Corporation shall be held in each year, on such day and at such time and place within or without the Marshall Islands as the Board may determine for the purpose of electing directors and transacting such other business as may properly be brought before the meeting. The Chairman or, in the Chairman's absence, another person designated by the Board shall act as the Chairman of all annual meetings of shareholders.
SECTION 2. NATURE OF BUSINESS AT ANNUAL MEETINGS OF SHAREHOLDERS: No business may be transacted at an annual meeting of shareholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof); (b) otherwise properly brought before the annual meeting by or at the direction of the Board (or any duly authorized committee thereof); or (c) otherwise properly brought before the annual meeting by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in Section 2 of this Article II and has remained a shareholder of record through the record date for the determination of shareholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in Section 2 of this Article II.
In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation (the "Secretary").
To be timely, a shareholder's notice to the Secretary of the Corporation must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one-hundred twenty (120) days nor more than one-hundred eighty (180) days prior to the one year anniversary of the mailing date of the proxy materials for the immediately preceding annual
meeting of shareholders or any such later deadline as may be required in the rules promulgated by the United States of America Securities and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding the solicitation of proxies. In no event shall the public disclosure of any adjournment of an annual meeting of the shareholders commence a new time period for the giving of the shareholder's notice described herein.
To be in proper written form, a shareholder's notice to the Secretary
must set forth as to each matter such shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such shareholder, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such shareholder, (iv) a description of
all arrangements or understandings between such shareholder and any other person
or persons (including their names) in connection with the proposal of such
business by such shareholder and any material interest of such shareholder in
such business and (v) a representation that such shareholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting. In addition, notwithstanding anything in Section 2 of this Article II
to the contrary, a shareholder intending to nominate one or more persons for
election as a Director at an annual meeting must comply with Article III,
Section 3 of these By-Laws for such nomination or nominations to be properly
brought before such meeting.
No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in Section 2 of this Article II; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in Section 2 of this Article II shall be deemed to preclude discussion by any shareholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman of the meeting shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
SECTION 3. SPECIAL MEETING: A special meeting of the shareholders may be called at any time by the Board, or by the Chairman, or by the President. No other person or persons are permitted to call a special meeting. No business may be conducted at the special meeting other than business brought before the meeting by the Board, the Chairman or the President. The Chairman or, in the Chairman's absence, another person designated by the Board shall act as the Chairman of all meetings of shareholders. If the Chairman of the special meeting determines that business was not properly brought before the special meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
SECTION 4. NOTICE OF MEETINGS: Notice of every annual and special meeting of shareholders, other than any meeting the giving of notice of which is otherwise prescribed by law, stating the date, time, place and purpose thereof, and in the case of special meetings, the name of the person or persons at whose direction the notice is being issued, shall be given personally or sent by mail, telegraph, cablegram, telex or teleprinter at least fifteen (15) but not more
than sixty (60) days before such meeting, to each shareholder of record entitled to vote thereat and to each shareholder of record who, by reason of any action proposed at such meeting would be entitled to have his shares appraised if such action were taken, and the notice shall include a statement of that purpose and to that effect. If mailed, notice shall be deemed to have been given when deposited in the mail, directed to the shareholder at his address as the same appears on the record of shareholders of the Corporation or at such address as to which the shareholder has given notice to the Secretary. Notice of a meeting need not be given to any shareholder who submits a signed waiver of notice, whether before or after the meeting, or who attends the meeting without protesting prior to the conclusion thereof the lack of notice to him.
SECTION 5. ADJOURNMENTS: Any meeting of shareholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the meeting is adjourned for lack of quorum, notice of the new meeting shall be given to each shareholder of record entitled to vote at the meeting. If after an adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to notice in Section 4 of this Article II.
SECTION 6. QUORUM: At all meetings of shareholders, except as otherwise expressly provided by law, there must be present either in person or by proxy shareholders of record holding at least a majority of the shares issued and outstanding and entitled to vote at such meetings in order to constitute a quorum, but if less than a quorum is present, a majority of those shares present either in person or by proxy shall have power to adjourn any meeting until a quorum shall be present.
SECTION 7. VOTING: Except as otherwise provided by applicable law, rules or regulations, the Corporation's Articles of Incorporation or elsewhere in these By-laws, if a quorum is present, the affirmative vote of at least a majority of the shares of stock represented at the meeting shall be the act of the shareholders. Notwithstanding the foregoing, at all meetings of shareholders for the election of directors, a plurality of the votes cast by the holders of shares entitled to vote in the election shall be sufficient to elect directors. At any meeting of shareholders, with respect to any matter, other than the election of directors, for which a shareholder is entitled to vote, each such shareholder shall be entitled to one vote for each share it holds. Each shareholder may exercise such voting right either in person or by proxy provided, however, that no proxy shall be valid after the expiration of eleven months from the date such proxy was authorized unless otherwise provided in the proxy. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in the law of the Marshall Islands to support an irrevocable power. A shareholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Shareholders may act by way of written consent in accordance with the provisions of Section 67 of the BCA.
SECTION 8. FIXING OF RECORD DATE: The Board may fix a date not more than sixty (60) nor less than fifteen (15) days prior to the date of any meeting of shareholders as the time as of which shareholders entitled to notice of and to vote at such a meeting shall be determined, and all persons who were holders
of record of voting shares at such time and no other shall be entitled to notice
of and to vote at such meeting. The Board may fix a date not exceeding sixty
(60) days preceding the date fixed for the payment of any dividend, the making
of any distribution, the allotment of any rights or the taking of any other
action, as a record time for the determination of the shareholders entitled to
receive any such dividend, distribution, or allotment or for the purpose of such
other action.
ARTICLE III
DIRECTORS
SECTION 1. POWERS: Except as otherwise provided by applicable law, rules or regulations, the affairs, business and property of the Corporation shall be managed by a Board of Directors.
SECTION 2. HOW ELECTED: Except as otherwise provided by law or in
Section 4 of this Article III, the directors of the Corporation (other than the
first Board of Directors if named in the Articles of Incorporation or designated
by the incorporators) shall be elected at the annual meeting of shareholders.
Except as otherwise provided in the Corporation's Articles of Incorporation,
each director shall be elected to serve until the third succeeding annual
meeting of shareholders and until his successor shall have been duly elected and
qualified, except in the event of his earlier resignation, removal or death.
SECTION 3. NOMINATION OF DIRECTORS: Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Articles of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Board nominations must be either selected, or recommended for the Board's selection, by either a Nominating Committee comprised solely of independent directors or by a majority of the independent directors. Notwithstanding the foregoing, if the Nominating Committee is comprised of at least three members, one director who is not independent and is not a current officer or employee or an immediate family member of such person, may be appointed to the Nominating Committee, if the Board, under exceptional and limited circumstances, determines that membership on the committee by the individual is required by the best interests of the Corporation and its shareholders, and the Board discloses, in the next annual meeting proxy statement (or annual report or equivalent, if the Corporation does not file an annual proxy statement) subsequent to such determination, the nature of the relationship and the reasons for that determination. A director appointed to the Nominating Committee pursuant to this exception may not serve for in excess of two years. The Corporation shall adopt a formal written charter or board resolution addressing the nominations process and such related matters as may be required under the federal securities laws of the United States of America.
Shareholder nominations for director must be made by a shareholder (i) who is a shareholder of record on the date of the giving of the notice provided for in Section 4 of Article II and on the record date for the determination of shareholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in Section 4 of Article III.
In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a shareholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one-hundred twenty (120) days nor more than one-hundred eighty (180) days prior to the one year anniversary of the mailing date of the proxy materials for the immediately preceding annual meeting of shareholders or any such later deadline as may be required in the rules promulgated by the SEC) to the Exchange Act regarding the solicitation of proxies.
To be in proper written form, a shareholder's notice to the Secretary
must set forth: (a) as to each person whom the shareholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder applicable to
issuers that are not foreign private issuers; and (b) as to the shareholder
giving the notice (i) the name and record address of such shareholder, (ii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially and of record by such shareholder, (iii) a description of
all arrangements or understandings between such shareholder and each proposed
nominee and any other person and persons (including their names) pursuant to
which the nomination(s) are to be made by such shareholder, (iv) a
representation that such shareholder intends to appear in person or by proxy at
the meeting to nominate the person or persons named in its notice and (v) any
other information relating to such shareholder that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a director if
elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in
Section 3 of this Article III. If the Chairman of the meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
Chairman shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded.
SECTION 4. VACANCIES: Except as otherwise provided by applicable law, rules or regulations, vacancies in the Board occurring by death, resignation, creation of new directorship, failure of the shareholders to elect the whole class of directors required to be elected at any annual election of directors or for any other reason, including removal of directors for cause, may be filled by the affirmative vote of at least a majority of the remaining directors then in office, although less than a quorum, at any special meeting called for that purpose or at any regular meeting of the Board.
SECTION 5. REGULAR MEETINGS: Regular meetings of the Board may be held at such time and place as may be determined by resolution of the Board and no
notice shall be required for any regular meeting. Except as otherwise provided by law, any business may be transacted at any regular meeting.
SECTION 6. SPECIAL MEETINGS: Special meetings of the Board may, unless otherwise prescribed by law, be called from time to time by at least two directors stating the time, place and purpose of such special meeting. Special meetings of the Board shall be held on a date and at such time and at such place as may be designated in the notice thereof by the directors calling the meeting.
SECTION 7. NOTICE OF SPECIAL MEETING: Notice of the special date, time
and place of each special meeting of the Board of Directors shall be given to
each director at least forty-eight (48) hours prior to such meeting, unless the
notice is given orally or delivered in person, in which case it shall be given
at least twenty-four (24) hours prior to such meeting. For the purpose of this
Section 7, notice shall be deemed to be duly given to a director if given to him
personally (including by telephone) or if such notice be delivered to such
director by mail, facsimile or hand delivery to his last known address. Notice
of a meeting need not be given to any director who submits a signed waiver of
notice, whether before of after the meeting, or who attends the meeting without
protesting, prior to the conclusion thereof, the lack of notice to him.
SECTION 8. QUORUM: At least a majority of the directors at the time in office, present in person or by proxy or conference telephone, shall constitute a quorum for the transaction of business.
SECTION 9. INTERESTED DIRECTORS. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board as defined in Section 55 of the Business Corporation Act of the Marshall Islands (the "BCA"), by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest and as to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.
SECTION 10. VOTING: Except as otherwise provided by applicable law, rules or regulations, the vote of at least a majority of the directors, present in person or conference telephone, at a meeting at which a quorum is present shall be the act of the directors. Any action required or permitted to be taken at a meeting may be taken without a meeting if all members of the Board consent thereto in writing.
SECTION 11. COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES: The Board may from time to time, in its discretion, fix the amounts which shall be payable to members of the Board and to members of any committee, for attendance at the meetings of the Board or of such committee and for services rendered to the Corporation.
ARTICLE IV
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE AND OTHER COMMITTEES: The Board may, by resolution or resolutions passed by at least a majority of the entire Board, designate from among its members an executive committee to consist of two or more of the directors of the Corporation, which, to the extent provided in said resolution or resolutions, or in these By-Laws, shall have and may exercise, to the extent permitted by law, the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no committee shall have the power or authority to (i) fill a vacancy in the Board or in a committee thereof, (ii) amend or repeal any by-law or adopt any new by-law, (iii) amend or repeal any resolution of the entire Board, (iv) or increase the number of directors on the Board, or (v) remove any director. In addition, the Board may designate from among its members other committees to consist of two or more of the directors of the Corporation, each of which shall perform such functions and have such authority and powers as shall be delegated to such committee by said resolution or resolutions or as provided for in these By-Laws, except that only the executive committee may have and exercise the powers of the Board. Members of the executive committee and any other committee shall hold office for such period as may be prescribed by the vote of the Board, subject, however, to removal at any time by the vote of the Board. Vacancies in membership of such committees shall be filled by vote of the Board. Committees may adopt their own rules of procedures and may meet at stated times or on such notice as they may determine. Each committee shall keep a record of its proceedings and report the same to the Board when required.
ARTICLE V
OFFICERS
SECTION 1. NUMBER AND DESIGNATION: The Board shall elect a Chairman, President, Chief Executive Officer, Secretary and Treasurer and such other officers as it may deem necessary. Officers may be of any nationality and need not be residents of the Marshall Islands. The officers shall be elected annually by the Board at its first meeting following the annual election of directors, (except that the initial officers may be named by the Board at its first meeting following such Board's appointment in the Articles of Incorporation or as designated by the incorporators) but in the event of the failure of the Board to so elect any officer, such officer may be elected at any subsequent meeting of the Board. The salaries of officers and any other compensation paid to them shall be fixed from time to time by the Board. The Board may at any meeting elect additional officers. Each officer shall hold office until the first meeting of the Board following the next annual election of directors and until his successor shall have been duly elected and qualified except in the event of
the earlier termination of his term of office, through death, resignation, removal or otherwise. Any officer may be removed by the Board at any time with or without cause. Any vacancy in an office may be filled for the unexpired position of the term of such office by the Board at any regular or special meeting.
SECTION 2. CHAIRMAN: The Chairman shall preside at all meetings of the Board and of the shareholders at which he or she shall be present. The Chairman shall have general executive powers, as well as the specific powers conferred by these Bylaws or by the Board of Directors. The Chairman shall perform all duties incident to the office of chairman of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or as may be provided by law.
SECTION 3. PRESIDENT: In the absence of the Chairman, the President of the Corporation shall preside at all meetings of the Board and of the shareholders at which he or she shall be present. The President shall have general executive powers, including all powers required by law to be exercised by a president of a corporation as such, as well as the specific powers conferred by these Bylaws or by the Board of Directors. The President shall perform all duties incident to the office of president of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or as may be provided by law.
SECTION 4. CHIEF EXECUTIVE OFFICER: In the absence of both the Chairman and the President, the Chief Executive Officer of the Corporation shall preside at all meetings of the Board and of the shareholders at which he or she shall be present. The Chief Executive Officer shall have general executive powers, as well as the specific powers conferred by these Bylaws or by the Board of Directors. The Chief Executive Officer shall perform all duties incident to the office of chief executive officer of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or as may be provided by law.
SECTION 5. SECRETARY: The Secretary shall act as Secretary of all meetings of the shareholders and of the Board at which he is present, shall have supervision over the giving and serving of notices of the Corporation, shall be the custodian of the corporate records and the corporate seal of the Corporation, shall be empowered to affix the corporate seal to those documents, the execution of which, on behalf of the Corporation under its seal, is duly authorized and when so affixed may attest the same, and shall exercise the powers and perform such other duties as may be assigned to him by the Board, the Chairman, the President or the Chief Executive Officer.
SECTION 6. TREASURER: The Treasurer shall have general supervision over the care and custody of the funds, securities, and other valuable effects of the Corporation and shall deposit the same or cause the same to be deposited in the name of the Corporation in such depositories as the Board may designate, shall disburse the funds of the Corporation as may be ordered by the Board, shall have supervision over the accounts of all receipts and disbursements of the Corporation, shall, whenever required by the Board, render or cause to be rendered financial statements of the Corporation, shall have the power and perform the duties usually incident to the office of Treasurer, and shall have such powers and perform other duties as may be assigned to him by the Board or President.
SECTION 7. OTHER OFFICERS: Officers other than those treated in Sections 2 through 4 of this Article V shall exercise such powers and perform such duties as may be assigned to them by the Board of Directors or the President.
SECTION 8. BOND: The Board shall have power to the extent permitted by law to require any officer, agent or employee of the Corporation to give bond for the faithful discharge of his duties in such form and with such surety as the Board may deem advisable.
ARTICLE VI
CERTIFICATES FOR SHARES
SECTION 1. FORM AND ISSUANCE: The shares of the Corporation shall be represented by certificates in form meeting the requirements of law and approved by the Board. Certificates shall be signed by the President or a Vice-President and by the Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer. These signatures may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or its employee.
SECTION 2. TRANSFER: The Board shall have power and authority to make such rules and regulations as they may deem expedient concerning the issuance, registration and transfer of certificates representing shares of the Corporation's stock, and may appoint transfer agents and registrars thereof.
SECTION 3. LOSS OF STOCK CERTIFICATES: The Board may direct a new certificate of stock to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct for indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.
ARTICLE VII
DIVIDENDS
SECTION 1. DECLARATION AND FORM: Dividends may be declared in conformity with applicable law by, and at the discretion of, the Board at any regular or special meeting. Dividends may be declared and paid in cash, stock or other property of the Corporation.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. INDEMNIFICATION: Any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprises shall be entitled to be indemnified by the Corporation upon the same terms, under the same conditions, and to the same extent as authorized by Section 60 of the BCA, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
SECTION 2. INSURANCE: The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer against any liability asserted against such person and incurred by such person in such capacity whether or not the Corporation would have the power to indemnify such person against such liability by law or under the provisions of these By-Laws
ARTICLE IX
CORPORATE SEAL
SECTION 1. FORM: The Seal of the Corporation, if any, shall be circular in form, with the name of the Corporation in the circumference and such other appropriate legend as the Board may from time to time determine.
ARTICLE X
FISCAL YEAR
SECTION 1. FISCAL YEAR: The fiscal year of the Corporation shall be such period of twelve consecutive months as the Board may by resolution designate.
ARTICLE XI
AMENDMENTS
SECTION 1. AMENDMENTS: Except as otherwise provided by applicable law, rules or regulations, these By-Laws may only be amended, added to, altered or repealed, or new By-Laws may be adopted, solely pursuant to the Corporation's
Articles of Incorporation.
EXHIBIT 5.1
REEDER & SIMPSON P.C.
RRE Commercial Center R. Simpson P.O. Box 601 8 Karaiskaki St., Moschaton 183 45 Majuro, MH 96960, Marshall Islands Athens, Greece Telephone: +692 625 3602 Telephone: +30 210 941 7208 Fax: +692 625 3603 Fax: +30 210 941 4790 E-mail: dreeder@ntamar.net E-mail: simpson@otenet.gr Mobile phone: +30 6945 465 173 May ____, 2005 |
FreeSeas Inc.
93 Akti Miaouli
Piraeus, Greece
Re: FREESEAS INC. (FORMERLY ADVENTURE HOLDINGS, S.A.)
Ladies and Gentlemen:
We have acted as Marshall Islands counsel to FreeSeas Inc. (formerly Adventure Holdings S.A.) a Marshall Islands corporation (the "Company"), in connection with the issuance of shares of common stock of the Company, par value $.001 per share (the "Common Stock") as described in the Company's Registration Statement on Form F-1 (File No.333- [___________]) as filed with the U.S. Securities and Exchange Commission (the "Commission") on April ___, 2005, as thereafter amended or supplemented (the "Registration Statement"). The Registration Statement was filed in connection with the merger of Trinity Partners Acquisition Company, Inc. ("Trinity"), with and into the Company (the "Merger") pursuant to the Agreement and Plan of Merger dated as of March 24, 2005 between Adventure Holdings S.A. and Trinity (the "Merger Agreement"), as described in the form of Joint Proxy Statement/Prospectus included in the Registration Statement (the "Trinity Proxy Statement").
The Common Stock has been or is being issued by the Company as follows:
(a) 1,782,600 shares of Common Stock (the "Merger Stock") to be issued to the
holders of the outstanding shares of common stock of Trinity pursuant to the
Merger, (b) 4,500,000 shares of Common Stock issued to the principal
shareholders of the Company and outstanding (the "Company Outstanding Stock"),
(c) an aggregate of 4,067,500 shares of Common Stock issuable upon the exercise
of certain options and warrants to be issued by the Company to the current
holders of the outstanding options and warrants of Trinity pursuant to the
Merger (the "Merger Underlying Shares") and (d) 950,000 shares of Common Stock
issuable upon the exercise of certain options and warrants issued to, or
beneficially owned by, the principal shareholders of the Company (the "Company
Underlying Shares"). The Company Outstanding Stock and the Company Underlying
Shares are included in the Registration Statement for purposes of registering
the resale thereof by such holders, as described in the form of prospectus
included in the Registration Statement relating to such resale (the "Resale
Prospectus").
We have examined originals or copies, certified or otherwise identified to our satisfaction the following documents (together the "Documents"): (i) the Registration Statement; (ii) the Resale Prospectus; (iii) the Merger Agreement and the Trinity Proxy Statement; (iv) the Company's Amended and Restated Articles of Incorporation; (v) the Company's Amended and Restated By-laws; (vi)
the form of the Articles of Merger between the Company and Trinity to be filed with the Registrar of Corporations of the Marshall Islands; and (vii) Certified copy of the minutes of meetings of the Board of Directors of the Company held __________ and ________ (the "Resolutions"). We have also examined such corporate documents and records of the Company and other instruments, certificates and documents as we have deemed necessary or appropriate as a basis for the opinions hereinafter expressed. In such examinations, we have assumed the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies or drafts of documents to be executed, the genuineness of all signatures, and the legal competence or capacity of persons or entities to execute and deliver such documents. As to various questions of fact which are material to the opinions hereinafter expressed, we have relied upon statements or certificates of public officials, directors of the Company and others, and have made no independent investigation, but have assumed that any representation, warranty or statement of fact or law, other than as to the laws of the Marshall Islands, made in any of the Documents is true, accurate and complete;
Based upon and subject to the foregoing, and having regard to such other legal considerations that we deem relevant, we are of the opinion that:
1. The shares of Company Outstanding Stock have been duly authorized and are validly issued, fully paid and non-assessable. The Company Underlying Shares, when issued upon the exercise of the respective options and warrants, will be validly issued, fully paid and non-assessable.
2. The Merger Stock and Merger Underlying Shares have been duly authorized, and when issued upon consummation of the Merger pursuant to the Merger Agreement, or upon the exercise of the respective options and warrants, will be validly issued, fully paid and non-assessable.
We qualify our opinion to the extent that we express no opinion as to any law other than Marshall Islands law and none of the opinions expressed herein relates to compliance with or matters governed by the laws of any jurisdiction except Marshall Islands. This opinion is limited to Marshall Islands law.
This opinion letter is limited to the laws of the Republic of the Marshall Islands, including the statutes and Constitution of the Republic of the Marshall Islands, as in effect on the date hereof and the reported judicial decisions interpreting such statutes and constitution.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and to each reference to us under the headings "Legal Matters" in the Resale Prospectus and the Trinity Proxy Statement, without admitting we are "experts" within the meaning of the Securities Act of 1933, as amended, or the rules and regulations of the Commission thereunder with respect to any part of the Registration Statement.
Very truly yours,
REEDER & SIMPSON P.C.
EXHIBIT 10.11
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) [LOGO] STANDARD SHIP MANAGEMENT AGREEMENT PART I CODE NAME: "SHIPMAN 98"
1. Date of Agreement JULY 1, 2004
2. Owners (name, place of registered office and law of registry) (CI.1) ADVENTURE TWO S.A.
Name
TRUST COMPANY COMPLEX, AJELTAKE RD
Place of registered office
AJELTAKE ISLAND, MAJURO
Law of registry
MARSHALL ISLANDS
3. Managers (name, place of registered office and law of registry) (CI. 1) FREE BULKERS S.A.
Name
TRUST COMPANY COMPLEX, AJELTAKE RD
Place of registered office
AJELTAKE ISLAND, MAJURO, MARSHALL ISLANDS
Law of registry WITH OFFICES AT AKTI MIAOULI
PIRAEUS - GR 18538 - GREECE
4. Day and year of commencement of Agreement (CI. 2) UPON SIGNATURE OF THIS AGREEMENT
5. Crew Management (state "yes" or "no" as agreed) (CI. 3.1) YES
6. Technical Management (state "yes" or "no" as agreed) (CI. 3.2) YES
7. Commercial Management (state "yes" or "no" as agreed) (CI. 3.3) YES
8. Insurance Arrangements (state "yes" or "no" as agreed) (CI. 3.4) YES
9. Accounting Services (state "yes" or "no" as agreed) (CI. 3.5) YES
10. Sale or purchase of the Vessel (state "yes" or "no" as agreed) (CI. 3.6) YES
11. Provisions (state "yes" or "no" as agreed) (CI. 3.7) YES
12. Bunkering (state "yes" or "no" as agreed) (CI. 3.8) YES
13. Chartering Services Period (only to be filled in if "yes" stated in Box 7)
(CI. 3.3(i))
YES
14. Owners' Insurance (state alternative (i), (ii) or (iii) of CI. 6.3) YES
15. Annual Management Fee (state annual amount) (CI. 8.1) USD 15,000 per month or prorata
16. Severance Costs (state maximum amount) (CI. 8.4(ii))
17. Day and year of termination of Agreement (CI. 17) AS PER CC. 17
18. Law and Arbitration (state alternative 19.1, 19.2 or 19.3; if 19.3 place of arbitration must be stated) (CI. 19) ENGLISH LAW, LONDON ARBITRATION
19. Notices (state postal and cable address, telex and telefax number for serving notice and communication to the Owners) (CI. 20) c/o FREE BULKERS S.A. unless otherwise notified in writing
20. Notices (state postal and cable address, telex and telefax number for
serving notice and communication to the Managers) (CI. 20}
93, AKTI MIAMOULI
PIRAEUS GR 18538, GREECE
TEL: +30-210-4528770
FAX: +30-210-4291010
It is mutually agreed between the party stated in Box 2 and the party stated in Box 3 that this Agreement consisting of PART I and PART II as well as Annexes "A" (Details or Vessel), "B" (Details of Crew), "C" (Budget) and "D" (Associated vessels) attached hereto, shall be performed subject to the conditions contained herein. In the event of a conflict of conditions, the provisions of PART I and Annexes "A", "B", "C" and "D" shall prevail over those of PART II to the extent of such conflict but no further.
Signature(s)(Owners) Signature(s)(Managers)
/s/ George D. Gourdomichalis /s/ Ion Varouxakis Printed and sold by Fr. G. Knudtzons Bogtrykkeri A/S,Vallensbaekvej 61, DK-2625 Vallensbaek.Fax: 45 4366 0708 |
The Baltic and International Maritime Council (BIMCO), Copenhagen
ISSUED: August 1998
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
1. DEFINITIONS
In this Agreement save where the context otherwise requires, the following words and expressions shall have the meanings hereby assigned to them.
"Owners" means the party identified in Box 2.
"Managers" means the party identified in Box 3.
"Vessel" means the vessel or vessels details of which are set out in Annex "A" attached hereto.
"Crew" means the Master, officers and ratings of the numbers, rank and nationality specified in Annex "B" attached hereto.
"Crew Support Costs" means all expenses of a general nature which are not particularly referable to any individual vessel for the time being managed by the Managers and which are incurred by the Managers for the purpose of providing an efficient and economic management service and, without prejudice to the generality of the foregoing, shall include the cost of crew standby pay, training schemes for officers and ratings, cadet training schemes, sick pay, study pay, recruitment and interviews.
"Severance Costs" means the costs which the employers are legally obliged to pay to or in respect of the Crew as a result of the early termination of any employment contract for service on the Vessel.
"Crew Insurances" means insurances against crew risks which shall include but not be limited to death, sickness, repatriation, injury, shipwreck unemployment indemnity and loss of personal effects.
"Management Services" means the services specified in sub-clauses 3.1 to 3.8 as indicated affirmatively in Boxes 5 to 12. "ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organization (IMO) by resolution A.741 (18) or any subsequent amendment thereto.
"STCW 95" means the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto.
2. APPOINTMENT OF MANAGERS
With effect from the day and year stated in Box 4 and continuing unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as the Managers of the Vessel.
3. BASIS OF AGREEMENT
Subject to the terms and conditions herein provided, during the period of this Agreement, the Managers shall carry out Management Services in respect of the Vessel as agents for and on behalf of the Owners. The Managers shall have authority to take such actions as they may from time to time in their absolute discretion consider to be necessary to enable them to perform this Agreement in accordance with sound ship management practice.
3.1 CREW MANAGEMENT
(only applicable if agreed according to Box 5)
The Managers shall provide suitably qualified Crew for the Vessel as required by the Owners in accordance with the STCW 95 requirements, provision of which includes but is not limited to the following functions:
(i) selecting and engaging the Vessel's Crew, including payroll arrangements, pension administration, and insurances for the Crew other than those mentioned in Clause 6;
(ii) ensuring that the applicable requirements of the law of the flag of the Vessel are satisfied in respect of manning levels, rank, qualification and certification of the Crew and employment regulations including Crew's tax, social insurance, discipline and other requirements;
(iii) ensuring that all members of the Crew have passed a medical examination with a qualified doctor certifying that they are fit for the duties for which they are engaged and are in possession of valid medical certificates issued in accordance with appropriate flag State requirements. In the absence of applicable flag State requirements the medical certificate shall be dated not more than three months prior to the respective Crew members leaving their country of domicile and maintained for the duration of their service on board the Vessel;
(iv) ensuring that the Crew shall have a command of the English language of a sufficient standard to enable them to perform their duties safely;
(v) arranging transportation of the Crew, including repatriation;
(vi) training of the Crew and supervising their efficiency;
(vii) conducting union negotiations;
(viii) operating the Managers' drug and alcohol policy unless otherwise agreed.
3.2 TECHNICAL MANAGEMENT
(only applicable if agreed according to Box 6)
The Managers shall provide technical management which includes, but is not limited to, the following functions:
(i) provision of competent personnel to supervise the maintenance and general efficiency of the Vessel;
(ii) arrangement and supervision of dry dockings, repairs, alterations and the upkeep of the Vessel to the standards required by the Owners provided that the Managers shall be entitled to incur the necessary expenditure to ensure that the Vessel will comply with the law of the flag of the Vessel and of the places where she trades, and all requirements and recommendations of the classification society;
(iii) arrangement of the supply of necessary stores, spares and lubricating oil;
(iv) appointment of surveyors and technical consultants as the Managers may consider from time to time to be necessary;
(v) development, implementation and maintenance of a Safety Management System (SMS) in accordance with the ISM Code (see sub-clauses 4.2 and 5.3).
3.3 COMMERCIAL MANAGEMENT
(only applicable if agreed according to Box 7)
The Managers shall provide the commercial operation of the Vessel, as required by the Owners, which includes, but is not limited to, the following functions:
(i) providing chartering services in accordance with the Owners' instructions which include, but are not limited to, seeking and negotiating employment for the Vessel and the conclusion (including the execution thereof) of charter parties or other contracts relating to the employment of the Vessel. If such a contract exceeds the period stated in Box 13, consent thereto in writing shall first be obtained from the Owners.
(ii) arranging of the proper payment to Owners or their nominees of all hire and/or freight revenues or other moneys of whatsoever nature to which Owners may be entitled arising out of the employment of or otherwise in connection with the Vessel.
(iii) providing voyage estimates and accounts and calculating of hire, freights, demurrage and/or despatch moneys due from or due to the charterers of the Vessel;
(iv) issuing of voyage instructions;
(v) appointing agents;
(vi) appointing stevedores;
(vii) arranging surveys associated with the commercial operation of the Vessel.
3.4 INSURANCE ARRANGEMENTS
(only applicable if agreed according to Box 8)
The Managers shall arrange insurances in accordance with Clause 6, on such terms and conditions as the Owners shall have instructed or agreed, in particular regarding conditions, insured values, deductibles and franchises.
3.5 ACCOUNTING SERVICES
(only applicable if agreed according to Box 9)
The Managers shall:
(i) establish an accounting system which meets the requirements of the Owners and provide regular accounting services, supply regular reports and records,
(ii) maintain the records of all costs and expenditure incurred as well as data necessary or proper for the settlement of accounts between the parties.
3.6 SALE OR PURCHASE OF THE VESSEL
(only applicable if agreed according to Box 10)
The Managers shall, in accordance with the Owners instructions, supervise the sale or purchase of the Vessel, including the
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
performance of any sale or purchase agreement, but not negotiation of the same.
3.7 PROVISIONS (only applicable if agreed according to Box 11) The Managers shall arrange for the supply of provisions.
3.8 BUNKERING (only applicable if agreed according to Box 12) The Managers shall arrange for the provision of bunker fuel of the quality specified by the Owners as required for the Vessel's trade.
4. MANAGERS' OBLIGATIONS
4.1 The Managers undertake to use their best endeavours to provide the agreed Management Services as agents for and on behalf of the Owners in accordance with sound ship management practice and to protect and promote the interests of the Owners in all matters relating to the provision of services hereunder. Provided, however, that the Managers in the performance of their management responsibilities under this Agreement shall be entitled to have regard to their overall responsibility in relation to all vessels as may from time to time be entrusted to their management and in particular, but without prejudice to the generality of the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and reasonable.
4.2 Where the Managers are providing Technical Management in accordance with sub-clause 3.2, they shall procure that the requirements of the law of the flag of the Vessel are satisfied and they shall in particular be deemed to be the "Company" as defined by the ISM Code, assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code when applicable.
5. OWNERS' OBLIGATIONS
5.1 The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this Agreement.
5.2 Where the Managers are providing Technical Management in accordance with sub-clause 3.2, the Owners shall:
(i) procure that all officers and ratings supplied by them or on their behalf comply with the requirements of STCW 95;
(ii) instruct such officers and ratings to obey all reasonable orders of the Managers in connection with the operation of the Managers' safety management system.
5.3 Where the Managers are not providing Technical Management in accordance with sub-clause 3.2, the Owners shall procure that the requirements of the law of the flag of the Vessel are satisfied and that they, or such other entity as may be appointed by them and identified to the Managers, shall be deemed to be the "Company" as defined by the ISM Code assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code when applicable.
6. INSURANCE POLICIES
The Owners shall procure, whether by instructing the Managers under sub-clause 3.4 or otherwise, that throughout the period of this Agreement:
6.1 at the Owners' expense, the Vessel is insured for not less than her sound market value or entered for her full gross tonnage, as the case may be for:
(i) usual hull and machinery marine risks (including crew negligence) and excess liabilities;
(ii) protection and indemnity risks (including pollution risks and Crew Insurances); and
(iii) war risks (including protection and indemnity and crew risks) in accordance with the best practice of prudent owners of vessels of a similar type to the Vessel, with first class insurance companies, underwriters or associations ("the Owners' Insurances");
6.2 all premiums and calls on the Owners' Insurances are paid promptly by their due date,
6.3 the Owners' Insurances name the Managers and, subject to underwriters' agreement, any third party designated by the Managers as a joint assured, with full cover, with the Owners obtaining cover in respect of each of the insurances specified in sub-clause 6.1:
(ii) if reasonably obtainable, on terms such that neither the Managers nor any such third party shall be under any liability in respect of premiums or calls arising in connection with the Owners' Insurances; or
(iii) Indicate alternative (i), (ii) or (iii) in Box 14. If Box 14 is left blank then (i) applies.
6.4 written evidence is provided, to the reasonable satisfaction of the Managers, of their compliance with their obligations under Clause 6 within a reasonable time of the commencement of the Agreement, and of each renewal date and, if specifically requested, of each payment date of the Owners' Insurances.
7. INCOME COLLECTED AND EXPENSES PAID ON BEHALF OF OWNERS
7.1 All moneys collected by the Managers under the terms of this Agreement (other than moneys payable by the Owners to the Managers) and any interest thereon shall be held to the credit of the Owners in a separate bank account.
7.2 All expenses incurred by the Managers under the terms of this Agreement on behalf of the Owners (including expenses as provided in Clause 8) may be debited against the Owners in the account referred to under sub-clause 7.1 but shall in any event remain payable by the Owners to the Managers on demand.
8. MANAGEMENT FEE
8.1 The Owners shall pay to the Managers for their services as Managers under this Agreement an annual management fee as stated in Box 15 which shall be payable by equal monthly instalments in advance, the first instalment being payable on the commencement of this Agreement (see Clause 2 and Box 4) and subsequent instalments being payable every month.
8.2 The management fee shall be subject to review upon mutual agreement.
8.3 The Managers shall, at no extra cost to the Owners, provide their own office accommodation, office staff, facilities and stationery. Without limiting the generality of Clause 7 the Owners shall reimburse the Managers for postage and communication expenses, travelling expenses, and other out of pocket expenses property incurred by the Managers in pursuance of the Management Services.
8.4 In the event of the appointment of the Managers being terminated by the Owners or the Managers in accordance with the provisions of Clauses 17 and 18 other than by reason of default by the Managers, or if the Vessel is lost, sold or otherwise disposed of, the "management fee" payable to the Managers according to the provisions of sub-clause 8.1, shall continue to be payable for a further period of three calendar months as from the termination date. In addition, provided that the Managers provide Crew for the Vessel in accordance with sub-clause 3.1:
(i) the Owners shall continue to pay Crew Support Costs during the said further period of three calendar months and
(ii) the owners shall pay an equitable proportion of any Severance Costs which may materialize, not exceeding the amount stated in Box 16.
8.5 If the Owners decide to lay-up the Vessel whilst this Agreement remains in force and such lay-up lasts for more than three months, an appropriate reduction of the management fee for the period exceeding three months until one month before the Vessel is again put into service shall be mutually agreed between the parties.
8.6 Unless otherwise agreed in writing all discounts and commissions obtained by the Managers in the course of the management of the Vessel shall be credited to the Owners.
9. BUDGETS AND MANAGEMENT OF FUNDS
9.1 The Managers shall present to the Owners annually a budget for the following twelve months in such form as the Owners require. The budget for the first year hereof is set out in Annex "C" hereto. Subsequent annual budgets shall be prepared by the Managers and submitted to the Owners not less than three months before the anniversary date of the
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
commencement of this Agreement (see Clause 2 and Box 4).
9.2 The Owners shall indicate to the Managers their acceptance and approval of the annual budget within one month of presentation and in the absence of any such indication the Managers shall be entitled to assume that the Owners have accepted the proposed budget.
9.3 Following the agreement of the budget, the Managers shall prepare and present to the Owners their estimate of the working capital requirement of the Vessel and the Managers shall each month up-date this estimate. Based thereon, the Managers shall each month request the Owners in writing for the funds required to run the Vessel for the ensuing month, including the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. Such funds shall be received by the Managers within ten running days after the receipt by the Owners of the Managers written request and shall be held to the credit of the Owners in a separate bank account.
9.4 The Managers shall produce a comparison between budgeted and actual income and expenditure of the Vessel in such form as required by the Owners monthly or at such other intervals as mutually agreed.
9.5 Notwithstanding anything contained herein to the contrary, the Managers shall in no circumstances be required to use or commit their own funds to finance the provision of the Management Services.
9.6 Notwithstanding the above, the Owners retain their right to directly pay any expenses related to the Vessel from their account.
10. MANAGERS' RIGHT TO SUB-CONTRACT
The Managers shall not have the right to sub-contract any of their obligations hereunder, including those mentioned in sub-clause 3.1, without the prior written consent of the Owners which shall not be unreasonably withheld. In the event of such a sub-contract the Managers shall remain fully liable for the due performance of their obligations under this Agreement.
11. RESPONSIBILITIES
11.1 FORCE MAJEURE - Neither the Owners nor the Managers shall be under any liability for any failure to perform any of their obligations hereunder by reason of any cause whatsoever of any nature or kind beyond their reasonable control.
11.2 LIABILITY TO OWNERS - (i) Without prejudice to sub-clause 11.1, the Managers shall be under no liability whatsoever to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services UNLESS same is proved to have resulted solely from the negligence, gross negligence or wilful default of the Managers or their employees, or agents or sub-contractors employed by them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers' personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers' liability for each incident or series of incidents giving rise to a claim or claims shall never exceed a total of ten times the annual management fee payable hereunder.
(ii) Notwithstanding anything that may appear to the contrary in this Agreement, the Managers shall not be liable for any of the actions of the Crew, even if such actions are negligent, grossly negligent or wilful, except only to the extent that they are shown to have resulted from a failure by the Managers to discharge their obligations under sub-clause 3.1, in which case their liability shall be limited in accordance with the terms of this Clause 11.
11.3 INDEMNITY - Except to the extent and solely for the amount therein set out that the Managers would he liable under sub-clause 11.2, the Owners hereby undertake to keep the Managers and their employees, agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of the Agreement, and against and in respect of all costs, losses, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
11.4 "HIMALAYA" - It is hereby expressly agreed that no employee or agent of the Managers (including every sub-contractor from time to time employed by the Managers) shall in any circumstances whatsoever be under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Clause 11, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 11 the Managers are or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.
12. DOCUMENTATION
Where the Managers are providing Technical Management in accordance with sub-clause 3.2 and/or Crew Management in accordance with sub-clause 3.1, they shall make available, upon Owners' request, all documentation and records related to the Safety Management System (SMS) and/or the Crew which the Owners need in order to demonstrate compliance with the ISM Code and STCW 95 or to defend a claim against a third party.
13. GENERAL ADMINISTRATION
13.1 The Managers shall handle and settle all claims arising out of the Management Services hereunder and keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving third parties.
13.2 The Managers shall, as instructed by the Owners, bring or defend actions, suits or proceedings in connection with matters entrusted to the Managers according to this Agreement.
13.3 The Managers shall also have power to obtain legal or technical or other outside expert advice in relation to the handling and settlement of claims and disputes or all other matters affecting the interests of the Owners in respect of the Vessel.
13.4 The Owners shall arrange for the provision of any necessary guarantee bond or other security.
13.5 Any costs reasonably incurred by the Managers in carrying out their obligations according to Clause 13 shall be reimbursed by the Owners.
14. AUDITING
The Managers shall at all times maintain and keep true and correct accounts and shall make the same available for inspection and auditing by the Owners at such times as may be mutually agreed. On the termination, for whatever reasons, of this Agreement, the Managers shall release to the Owners, if so requested, the originals where possible, or otherwise certified copies, of all such accounts and all documents specifically relating to the Vessel and her operation.
15. INSPECTION OF VESSEL
The Owners shall have the right at any time after giving reasonable notice to the Managers to inspect the Vessel for any reason they consider necessary.
16. COMPLIANCE WITH LAWS AND REGULATIONS
The Managers will not do or permit to be done anything which might cause any breach or infringement of the laws and regulations of the Vessel's flag, or of the places where she trades.
17. DURATION OF THE AGREEMENT
This Agreement shall come into effect on the day and year stated in Box 4 and shall continue until the date stated in Box 17. Thereafter it shall continue until terminated by either party giving to the other notice in writing, in which event the Agreement shall
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
terminate upon the expiration of a period of two months from the date upon which such notice was given.
18. TERMINATION
18.1 OWNERS' DEFAULT
(i) The Managers shall be entitled to terminate the Agreement with immediate effect by notice in writing if any moneys payable by the Owners under this Agreement and/or the owners of any associated vessel, details of which are listed in Annex "D", shall not have been received in the Managers' nominated account within ten running days of receipt by the Owners of the Managers written request or if the Vessel is repossessed by the Mortgagees.
(ii) If the Owners:
(a) fail to meet their obligations under sub-clauses 5.2 and 5.3 of this Agreement for any reason within their control, or
(b) proceed with the employment of or continue to employ the Vessel in the carriage of contraband, blockade running, or in an unlawful trade, or on a voyage which in the reasonable opinion of the Managers is unduly hazardous or improper,
the Managers may give notice of the default to the Owners, requiring them to remedy it as soon as practically possible. In the event that the Owners fail to remedy it within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate the Agreement with immediate effect by notice in writing.
18.2 MANAGERS' DEFAULT
If the Managers fail to meet their obligations under Clauses 3 and 4 of this Agreement for any reason within the control of the Managers, the Owners may give notice to the Managers of the default, requiring them to remedy it as soon as practically possible. In the event that the Managers fail to remedy it within a reasonable time to the satisfaction of the Owners, the Owner shall be entitled to terminate the Agreement with immediate effect by notice in writing.
18.3 EXTRAORDINARY TERMINATION
This Agreement shall be deemed to be terminated in the case of the sale of the Vessel or if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned.
18.4 For the purpose of sub-clause 18.3 hereof
(i) the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the Owners cease to be registered as Owners of the Vessel;
(ii) the Vessel shall not be deemed to be lost unless either she has become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred.
18.5 This Agreement shall terminate forthwith in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors.
18.6 The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination.
19. LAW AND ARBITRATION
19.1 This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause.
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement.
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.
19.2 This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code and the Maritime Law of the United States and any dispute arising out of or in connection with this Agreement shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for the purposes of enforcing any award, judgement may be entered on an award by any court of competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc.
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current at the time when the arbitration proceedings are commenced.
19.3 This Agreement shall be governed by and construed in accordance with the laws of the place mutually agreed by the parties and any dispute arising out of or in connection with this Agreement shall be referred to arbitration at a mutually agreed place, subject to the procedures applicable there.
19.4 If Box 18 in Part I is not appropriately filled in, sub-clause 19.1 of this Clause shall apply.
Note: 19.1, 19.2 and 19.3 are alternatives; indicate alternative agreed in Box 18.
20. NOTICES
20.1 Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service.
20.2 The address of the Parties for service of such communication shall be as stated in Boxes 19 and 20, respectively.
ANNEX "A" (DETAILS OF VESSEL OR VESSELS) TO THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
Date of Agreement: JULY 1, 2004
Name of Vessel(s): M/V "FREE DESTINY"
Particulars of Vessel(s): BUILT 1982
IMO # 8128157
FLAG MARSHALL ISLANDS
CLASS LRS
GRT 16282 / NRT 9377
ANNEX "B" (DETAILS OF CREW) TO
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)
STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
Date of Agreement: JULY 1, 2004
Details of Crew: AT MANAGER'S DISCRETION / AUTHORITY
Numbers Rank Nationality
ANNEX "C" (BUDGET) TO
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)
STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
Date of Agreement: 1 JULY 2004
Managers' Budget for the first year with effect from the Commencement Date of this Agreement
AT MANAGER'S DISCRETION / AUTHORITY
ANNEX "D" (ASSOCIATED VESSELS) TO
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)
STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
NOTE: PARTIES SHOULD BE AWARE THAT BY COMPLETING THIS ANNEX "D" THEY WILL BE SUBJECT TO THE PROVISIONS OF SUB-CLAUSE 18.1(i) OF THIS AGREEMENT.
Date of Agreement: 1 JULY 2004
Details of Associated Vessels: M/V FREE DESTINY
M/V FREE ENVOY
EXHIBIT 10.12
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) [LOGO] STANDARD SHIP MANAGEMENT AGREEMENT PART 1 CODE NAME: "SHIPMAN 98"
1. Date of Agreement JULY 1, 2004
2. Owners (name, place of registered office and law of registry) (Cl.1) ADVENTURE THREE S.A.
Name
TRUST COMPANY COMPLEX, AJELTAKE RD
Place of registered office
AJELTAKE ISLAND, MAJURO
Law of registry
MARSHALL ISLANDS
3. Managers (name, place of registered office and law of registry) (Cl. 1) FREE BULKERS S.A.
Name
TRUST COMPANY COMPLEX, AJELTAKE RD
Place of registered office
AJELTAKE ISLAND, MAJURO, MARSHALL ISLANDS
Law of registry WITH OFFICES AT AKTI MIAOULI
PIRAEUS - GR 18538 - GREECE
4. Day and year of commencement of Agreement (Cl. 2) UPON SIGNATURE OF THIS AGREEMENT
5. Crew Management (state "yes" or "no" as agreed) (Cl.3.1) YES
6. Technical Management (state "yes" or "no" as agreed) (Cl. 3.2) YES
7. Commercial Management (state "yes" or "no" as agreed) (Cl. 3.3) YES
8. Insurance Arrangements (state "yes" or "no" as agreed) (Cl. 3.4) YES
9. Accounting Services (state "yes" or "no" as agreed) (Cl. 3.5) YES
10. Sale or purchase of the Vessel (state "yes" or "no" as agreed) (Cl. 3.6) YES
11. Provisions (state "yes" or "no" as agreed) (Cl. 3.7) YES
12. Bunkering (state "yes" or "no" as agreed) (Cl. 3.8) YES
13. Chartering Services Period (only to be filled in if "yes" stated in Box 7)
(Cl 3.3(i))
YES
14. Owners' Insurance (state alternative (i), (ii) or (iii) of Cl. 6.3) YES
15. Annual Management Fee (state annual amount) (Cl. 8.1) USD 15,000 Per month or prorata
16. Severance Costs (state maximum amount) (Cl.8.4(ii))
17. Day and year of termination of Agreement (Cl. 17) AS PER CC. 17
18. Law and Arbitration (state alternative 19.1, 19.2 or 19.3; if 19.3 place of arbitration must be stated) (Cl. 19) ENGLISH LAW, LONDON ARBITRATION
19. Notices (state postal and cable address, telex and telefax number for serving notice and communication to the Owners) (Cl. 20) c/o FREE BULKERS S.A. unless otherwise notified in writing
20. Notices (state postal and cable address, telex and telefax number for
serving notice and communication to the Managers) (Cl. 20)
93, AKTI MIAOULI
PIRAEUS GR 18538, GREECE
TEL: +30-210-4528770
FAX: +30-210-4291010
It is mutually agreed between the party stated in Box 2 and the party stated in Box 3 that this Agreement consisting of PART I and PART II as well as Annexes "A" (Details or Vessel), "B" (Details of Crew), "C" (Budget) and "D" (Associated vessels) attached hereto, shall be performed subject to the conditions contained herein. In the event of a conflict of conditions, the provisions of PART I and Annexes "A", "B", "C" and "D" shall prevail over those of PART II to the extent of such conflict but no further.
Signature(s)(Owners) Signature(s)(Managers)
/s/ George D. Gourdomichalis /s/ Ion Varouxakis Printed and sold by Fr. G. Knudtzons Bogtrykkeri A/S,Vallensbaekvej 61, DK-2625 Vallensbaek.Fax: + 4543660708 |
The Baltic and International Maritime Council (BIMCO), Copenhagen ISSUED: August 1998
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
1. DEFINITIONS
In this Agreement save where the context otherwise requires, the following words and expressions shall have the meanings hereby assigned to them.
"Owners" means the party identified in Box 2.
"Managers" means the party identified in Box 3.
"Vessel" means the vessel or vessels details of which are set out in Annex "A" attached hereto.
"Crew" means the Master, officers and ratings of the numbers, rank and nationality specified in Annex "B" attached hereto.
"Crew Support Costs" means all expenses of a general nature which are not particularly referable to any individual vessel for the time being managed by the Managers and which are incurred by the Managers for the purpose of providing an efficient and economic management service and, without prejudice to the generality of the foregoing, shall include the cost of crew standby' pay, training schemes for officers and ratings, cadet training schemes, sick pay, study pay, recruitment and interviews.
"Severance Costs" means the costs which the employers are legally obliged to pay to or in respect of the Crew as a result of the early termination of any employment contract for service on the Vessel.
"Crew Insurances" means insurances against crew risks which shall include but not be limited to death, sickness, repatriation, injury, shipwreck unemployment indemnity and loss of personal effects.
"Management Services" means the services specified in sub-clauses 3.1 to 3.8 as indicated affirmatively in Boxes 5 to 12.
"ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organization (IMO) by resolution A.741 (18) or any subsequent amendment thereto.
"STCW 95" means the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto.
2. APPOINTMENT OF MANAGERS
With effect from the day and year stated in Box 4 and continuing unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as the Managers of the Vessel.
3. BASIS OF AGREEMENT
Subject to the terms and conditions herein provided, during the period of this Agreement, the Managers shall carry out Management Services in respect of the Vessel as agents for and on behalf of the Owners. The Managers shall have authority to take such actions as they may from time to time in their absolute discretion consider to be necessary to enable them to perform this Agreement in accordance with sound ship management practice.
3.1 Crew Management
(only applicable if agreed according to Box 5)
The Managers shall provide suitably qualified Crew for the Vessel as required by the Owners in accordance with the STCW 95 requirements, provision of which includes but is not limited to the following functions:
(i) selecting and engaging the Vessel's Crew, including payroll arrangements, pension administration, and insurances for the Crew other than those mentioned in Clause 6;
(ii) ensuring that the applicable requirements of the law of the flag of the Vessel are satisfied in respect of manning levels, rank, qualification and certification of the Crew and employment regulations including Crew's tax, social insurance, discipline and other requirements;
(iii) ensuring that all members of the Crew have passed a medical examination with a qualified doctor certifying that they are fit for the duties for which they are engaged and are in possession of valid medical certificates issued in accordance with appropriate flag State requirements. In the absence of applicable flag State requirements the medical certificate shall be dated not more than three months prior to the respective Crew members leaving their country of domicile and maintained for the duration of their service on board the Vessel;
(iv) ensuring that the Crew shall have a command of the English language of a sufficient standard to enable them to perform their duties safely;
(v) arranging transportation of the Crew, including repatriation;
(vi) training of the Crew and supervising their efficiency;
(vii) conducting union negotiations;
(viii) operating the Managers' drug and alcohol policy unless otherwise agreed.
3.2 TECHNICAL MANAGEMENT
(only applicable if agreed according to Box 6)
The Managers shall provide technical management which includes, but is not limited to, the following functions:
(i) provision of competent personnel to supervise the maintenance and general efficiency of the Vessel;
(ii) arrangement and supervision of dry dockings, repairs, alterations and the upkeep of the Vessel to the standards required by the Owners provided that the Managers shall be entitled to incur the necessary expenditure to ensure that the Vessel will comply with the law of the flag of the Vessel and of the places where she trades, and all requirements and recommendations of the classification society;
(iii) arrangement of the supply of necessary stores, spares and lubricating oil;
(iv) appointment of surveyors and technical consultants as the Managers may consider from time to time to be necessary;
(v) development, implementation and maintenance of a Safety Management System (SMS) in accordance with the ISM Code (see sub-clauses 4.2 and 5.3).
3.3 COMMERCIAL MANAGEMENT
(only applicable if agreed according to Box 7)
The Managers shall provide the commercial operation of the Vessel, as required by the Owners, which includes, but is not limited to, the following functions:
(i) providing chartering services in accordance with the Owners' instructions which include, but are not limited to, seeking and negotiating employment for the Vessel and the conclusion (including the execution thereof) of charter parties or other contracts relating to the employment of the Vessel. If such a contract exceeds the period stated in Box 13, consent thereto in writing shall first be obtained from the Owners.
(ii) arranging of the proper payment to Owners or their nominees of all hire and/or freight revenues or other moneys of whatsoever nature to which Owners may be entitled arising out of the employment of or otherwise in connection with the Vessel.
(iii) providing voyage estimates and accounts and calculating of hire, freights, demurrage and/or despatch moneys due from or due to the charterers of the Vessel;
(iv) issuing of voyage instructions;
(v) appointing agents;
(vi) appointing stevedores;
(vii) arranging surveys associated with the commercial operation of the Vessel.
3.4 INSURANCE ARRANGEMENTS
(only applicable if agreed according to Box 8)
The Managers shall arrange insurances in accordance with Clause 6, on such terms and conditions as the Owners shall have instructed or agreed, in particular regarding conditions, insured values, deductibles and franchises.
3.5 ACCOUNTING SERVICES
(only applicable if agreed according to Box 9)
The Managers shall:
(i) establish an accounting system which meets the requirements of the Owners and provide regular accounting services, supply regular reports and records,
(ii) maintain the records of all costs and expenditure incurred as well as data necessary or proper for the settlement of accounts between the parties.
3.6 SALE OR PURCHASE OF THE VESSEL
(only applicable if agreed according to Box 10)
The Managers shall, in accordance with the Owners' instructions, supervise the sale or purchase of the Vessel, including the
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
performance of any sale or purchase agreement, but not negotiation of the same.
3.7 PROVISIONS (only applicable it agreed according to Box 11) The Managers shall arrange for the supply of provisions.
3.8 BUNKERING (only applicable if agreed according to Box 12) The Managers shall arrange for the provision of bunker fuel of the quality specified by the Owners as required for the Vessel's trade.
4. MANAGERS' OBLIGATIONS
4.1 The Managers undertake to use their best endeavours to provide the agreed Management Services as agents for and on behalf of the Owners in accordance with sound ship management practice and to protect and promote the interests of the Owners in all matters relating to the provision of services hereunder. Provided, however, that the Managers in the performance of their management responsibilities under this Agreement shall be entitled to have regard to their overall responsibility in relation to all vessels as may from time to time be entrusted to their management and in particular, but without prejudice to the generality of the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and reasonable.
4.2 Where the Managers are providing Technical Management in accordance with sub-clause 3.2, they shall procure that the requirements of the law of the flag of the Vessel are satisfied and they shall in particular be deemed to be the "Company" as defined by the ISM Code, assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code when applicable.
5. OWNERS' OBLIGATIONS
5.1 The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this Agreement.
5.2 Where the Managers are providing Technical Management in accordance with sub-clause 3.2, the Owners shall:
(i) procure that all officers and ratings supplied by them or on their behalf comply with the requirements of STCW 95;
(ii) instruct such officers and ratings to obey all reasonable orders of the Managers in connection with the operation of the Managers' safety management system.
5.3 Where the Managers are not providing Technical Management in accordance with sub-clause 3.2, the Owners shall procure that the requirements of the law of the flag of the Vessel are satisfied and that they, or such other entity as may be appointed by them and identified to the Managers, shall be deemed to be the "Company" as defined by the ISM Code assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code when applicable.
6. INSURANCE POLICIES
The Owners shall procure, whether by instructing the Managers under sub-clause 3.4 or otherwise, that throughout the period of this Agreement:
6.1 at the Owners' expense, the Vessel is insured for not less than her sound market value or entered for her full gross tonnage, as the case may be for:
(i) usual hull and machinery marine risks (including crew negligence) and excess liabilities;
(ii) protection and indemnity risks (including pollution risks and Crew Insurances); and
(iii) war risks (including protection and indemnity and crew risks) in accordance with-the best practice of prudent owners of vessels of a similar type to the Vessel, with first class insurance companies, underwriters or associations ("the Owners' Insurances");
6.2 all premiums and calls on the Owners' Insurances are paid promptly by their due date,
6.3 the Owners' Insurances name the Managers and, subject to underwriters' agreement, any third party designated by the Managers as a joint assured, with full cover, with the Owners obtaining cover in respect of each of the insurances specified in sub-clause 6.1:
(i) if reasonably obtainable, on terms such that neither the Managers nor any such third party shall be under any liability in respect of premiums or calls arising in connection with the Owners' Insurances; or
Indicate alternative (i), (ii) or (iii) in Box 14. If Box 14 is left blank then (i) applies.
6.4 written evidence is provided, to the reasonable satisfaction of the Managers, of their compliance with their obligations under Clause 6 within a reasonable time of the commencement of the Agreement, and of each renewal date and, if specifically requested, of each payment date of the Owners' Insurances.
7. INCOME COLLECTED AND EXPENSES PAID ON BEHALF OF OWNERS
7.1 All moneys collected by the Managers under the terms of this Agreement (other than moneys payable by the Owners to the Managers) and any interest thereon shall be held to the credit of the Owners in a separate bank account.
7.2 All expenses incurred by the Managers under the terms of this Agreement on behalf of the Owners (including expenses as provided in Clause 8) may be debited against the Owners in the account referred to under sub-clause 7.1 but shall in any event remain payable by the Owners to the Managers on demand.
8. MANAGEMENT FEE
8.1 The Owners shall pay to the Managers for their services as Managers under this Agreement an annual management fee as stated in Box 15 which shall be payable by equal monthly instalments in advance, the first instalment being payable on the commencement of this Agreement (see Clause 2 and Box 4) and subsequent instalments being payable every month.
8.2 The management fee shall be subject to review upon mutual agreement.
8.3 The Managers shall, at no extra cost to the Owners, provide their own office accommodation, office staff, facilities and stationery. Without limiting the generality of Clause 7 the Owners shall reimburse the Managers for postage and communication expenses, travelling expenses, and other out of pocket expenses property incurred by the Managers in pursuance of the Management Services.
8.4 In the event of the appointment of the Managers being terminated by the Owners or the Managers In accordance with the provisions of Clauses 17 and 18 other than by reason of default by the Managers, or if the Vessel is lost, sold or otherwise disposed of, the "management fee" payable to the Managers according to the provisions of sub-clause 8.1, shall continue to be payable for a further period of three calendar months as from the termination date. In addition, provided that the Managers provide Crew for the Vessel in accordance with sub-clause 3.1:
(i) the Owners shall continue to pay Crew Support Costs during the said further period of three calendar months and
(ii) the Owners shall pay an equitable proportion of any Severance Costs which may materialize, not exceeding the amount stated in Box 16.
8.5 If the Owners decide to lay-up the Vessel whilst this Agreement remains in force and such lay-up lasts for more than three months, an appropriate reduction of the management fee for the period exceeding three months until one month before the Vessel is again put into service shall be mutually agreed between the parties.
8.6 Unless otherwise agreed in writing all discounts and commissions obtained by the Managers in the course of the management of the Vessel shall be credited to the Owners.
9. BUDGETS AND MANAGEMENT OF FUNDS
9.1 The Managers shall present to the Owners annually a budget for the following twelve months in such form as the Owners require. The budget for the first year hereof is set out in Annex "C" hereto. Subsequent annual budgets shall be prepared by the Managers and submitted to the Owners not less than three months before the anniversary date of the
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
commencement of this Agreement (see Clause 2 and Box 4).
9.2 The Owners shall indicate to the Managers their acceptance and approval of the annual budget within one month of presentation and in the absence of any such indication the Managers shall be entitled to assume that the Owners have accepted the proposed budget.
9.3 Following the agreement of the budget, the Managers shall prepare and present to the Owners their estimate of the working capital requirement of the Vessel and the Managers shall each month up-date this estimate. Based thereon, the Managers shall each month request the Owners in writing for the funds required to run the Vessel for the ensuing month, including the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. Such funds shall be received by the Managers within ten running days after the receipt by the Owners of the Managers' written request and shall be held to the credit of the Owners in a separate bank account.
9.4 The Managers shall produce a comparison between budgeted and actual income and expenditure of the Vessel in such form as required by the Owners monthly or at such other intervals as mutually agreed.
9.5 Notwithstanding anything contained herein to the contrary, the Managers shall in no circumstances be required to use or commit their own funds to finance the provision of the Management Services.
9.6 Notwithstanding the above, the owners retain their right to directly pay any expenses related to the vessel from their account.
10. MANAGERS' RIGHT TO SUB-CONTRACT
The Managers shall not have the right to sub-contract any of their obligations hereunder, including those mentioned in sub-clause 3.1, without the prior written consent of the Owners which shall not be unreasonably withheld. In the event of such a sub-contract the Managers shall remain fully liable for the due performance of their obligations under this Agreement.
11. RESPONSIBILITIES
11.1 FORCE MAJEURE - Neither the Owners nor the Managers shall be under any liability for any failure to perform any of their obligations hereunder by reason of any cause whatsoever of any nature or kind beyond their reasonable control.
11.2 LIABILITY TO OWNERS - (i) Without prejudice to sub-clause 11.1, the Managers shall be under no liability whatsoever to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services UNLESS same is proved to have resulted solely from the negligence, gross negligence or wilful default of the Managers or their employees, or agents or sub-contractors employed by them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers' personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers' liability for each incident or series of incidents giving rise to a claim or claims shall never exceed a total of ten times the annual management fee payable hereunder.
(ii) Notwithstanding anything that may appear to the contrary in this Agreement, the Managers shall not be liable for any of the actions of the Crew, even if such actions are negligent, grossly negligent or wilful, except only to the extent that they are shown to have resulted from a failure by the Managers to discharge their obligations under sub-clause 3.1, in which case their liability shall be limited in accordance with the terms of this Clause 11.
11.3 INDEMNITY - Except to the extent and solely for the amount therein set out that the Managers would be liable under sub-clause 11.2, the Owners hereby undertake to keep the Managers and their employees, agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of the Agreement, and against and in respect of all costs, losses, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
11.4 "HIMALAYA" - It is hereby expressly agreed that no employee or agent of the Managers (including every sub-contractor from time to time employed by the Managers) shall in any circumstances whatsoever be under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising of resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Clause 11, every exemption, limitation condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 11 the Managers are or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.
12. DOCUMENTATION
Where the Managers are providing Technical Management in accordance with sub-clause 3.2 and/or Crew Management in accordance with sub-clause 3.1, they shall make available, upon Owners' request, all documentation and records related to the Safety Management System (SMS) and/or the Crew which the Owners need in order to demonstrate compliance with the ISM Code and STCW 95 or to defend a claim against a third party.
13. GENERAL ADMINISTRATION
13.1 The Managers shall handle and settle all claims arising out of the Management Services hereunder and keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving third parties.
13.2 The Managers shall, as instructed by the Owners, bring or defend actions, suits or proceedings in connection with matters entrusted to the Managers according to this Agreement.
13.3 The Managers shall also have power to obtain legal or technical or other outside expert advice in relation to the handling and settlement of claims and disputes or all other matters affecting the interests of the Owners in respect of the Vessel.
13.4 The Owners shall arrange for the provision of any necessary guarantee bond or other security.
13.5 Any costs reasonably incurred by the Managers in carrying out their obligations according to Clause 13 shall be reimbursed by the Owners.
14. AUDITING
The Managers shall at all times maintain and keep true and correct accounts and shall make the same available for inspector and auditing by the Owners at such times as may be mutually agreed. On the termination, for whatever reasons, of this Agreement, the Managers shall release to the Owners, if so requested, the originals where possible, or otherwise certified copies,of all such accounts and all documents specifically relating to the Vessel and her operation.
15. INSPECTION OF VESSEL
The Owners shall have the right at any time after giving reasonable notice to the Managers to inspect the Vessel for any reason they consider necessary.
16. COMPLIANCE WITH LAWS AND REGULATIONS
The Managers will not do or permit to be done anything which might cause any breach or infringement of the laws and regulations of the Vessel's flag, or of the places where she trades.
17. DURATION OF THE AGREEMENT
This Agreement shall come into effect on the day and year stated in Box 4 and shall continue until the date stated in Box 17. Thereafter it shall continue until terminated by either party giving to the other-notice in writing, in which event the Agreement shall
PART II
"SHIPMAN 98" STANDARD SHIP MANAGEMENT AGREEMENT
terminate upon the expiration of a period of two months from the date upon which such notice was given.
18. TERMINATION
18.1 OWNERS' DEFAULT
(i) The Managers shall be entitled to terminate the Agreement with immediate effect by notice in writing if any moneys payable by the Owners under this Agreement and/or the owners of any associated vessel, details of which are listed in Annex "D", shall not have been received in the Managers' nominated account within ten running days of receipt by the Owners of the Managers written request or if the Vessel is repossessed by the Mortgagees.
(ii) If the Owners:
(a) fail to meet their obligations under sub-clauses 5.2 and 5.3 of this Agreement for any reason within their control, or
(b) proceed with the employment of or continue to employ the Vessel in the carriage of contraband, blockade running, or in an unlawful trade, or on a voyage which in the reasonable opinion of the Managers is unduly hazardous or improper,
the Managers may give notice of the default to the Owners, requiring them to remedy it as soon as practically possible. In the event that the Owners fail to remedy it within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate the Agreement with immediate effect by notice in writing.
18.2 MANAGERS' DEFAULT
If the Managers fail to meet their obligations under Clauses 3 and 4 of this Agreement for any reason within the control of the Managers, the Owners may give notice to the Managers of the default, requiring them to remedy it as soon as practically possible. In the event that the Managers fail to remedy it within a reasonable time to the satisfaction of the Owners, the Owners shall be entitled to terminate the Agreement with immediate effect by notice in writing.
18.3 EXTRAORDINARY TERMINATION
This Agreement shall be deemed to be terminated in the case of the sale of the Vessel or if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned.
18.4 For the purpose of sub-clause 18.3 hereof
(i) the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the Owners cease to be registered as Owners of the Vessel;
(ii) the Vessel shall not be deemed to be lost unless either she has become an actual total loss of agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred.
18.5 This Agreement shall terminate forthwith in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors.
18.6 The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination.
19. LAW AND ARBITRATION
19.1 This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause.
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement.
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.
19.2 This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code and the Maritime Law of the United States and any dispute arising out of or in connection with this Agreement shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for the purposes of enforcing any award, judgement may be entered on an award by any court of competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc.
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current at the time when the arbitration proceedings are commenced.
19.3 This Agreement shall be governed by and construed in accordance with the laws of the place mutually agreed by the parties and any dispute arising out of or in connection with this Agreement shall be referred to arbitration at a mutually agreed place, subject to the procedures applicable there.
19.4 If Box 18 in Part I is not appropriately filled in, sub-clause 19.1 of this Clause shall apply.
Note: 19.1, 19.2 and 19.3 are alternatives; indicate alternative agreed in Box 18.
20. NOTICES
20.1 Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service.
20.2 The address of the Parties for service of such communication shall be as stated in Boxes 19 and 20, respectively.
ANNEX "A" (DETAILS OF VESSEL OR VESSELS) TO THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
Date of Agreement: JULY 1, 2004
Name of Vessel(s): M/V "FREE ENVOY"
Particulars of Vessel(s): BUILT 1984
IMO # 8317150
FLAG MARSHALL ISLANDS
CLASS KRS
CRT 15715/NRT 9106
ANNEX "B" (DETAILS OF CREW) TO
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)
STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
Date of Agreement: JULY 1, 2004
Details of Crew: AT MANAGER'S DISCRETION/AUTHORITY
Numbers Rank Nationality
ANNEX "C" (BUDGET) TO
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)
STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
Date of Agreement: 1 JULY 2004
Managers' Budget for the first year with effect from the Commencement Date of this Agreement:
AT MANAGER'S DISCRETION/AUTHORITY
ANNEX "D" (ASSOCIATED VESSELS) TO
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)
STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: "SHIPMAN 98"
NOTE: PARTIES SHOULD BE AWARE THAT BY COMPLETING THIS ANNEX "D" THEY WILL BE SUBJECT TO THE PROVISIONS OF SUB-CLAUSE 18.1(i) OF THIS AGREEMENT.
Date of Agreement: 1 JULY 2004
Details of Associated Vessels: M/V FREE DESTINY
M/V FREE ENVOY
EXHIBIT 21
REGISTRANT'S SUBSIDIARIES JURISDICTION OF FORMATION ------------------------- ------------------------- Adventure Two S.A. Marshall Islands Adventure Three S.A. Marshall Islands Adventure Four S.A. Marshall Islands |
EXHIBIT 23.3
[PricewaterhouseCoopers Logo]
PricewaterhouseCoopers S.A.
268 Kifissias Avenue
152 32 Halandri
Greece
www.pricewaterhousecoopers.gr
e-mail: pwc.greece@pwcglobal.com
Tel.: 30-210-6874 400
Fax: 30-210-8674 444
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form F-1 of our report dated May 11, 2005 relating to the consolidated financial statements, which appear in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers -------------------------- PricewaterhouseCoopers SA Athens, Greece May 11, 2005 |
Exhibit 23.4
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the inclusion in this Joint Proxy Statement/Prospectus of our report, dated February 15, 2005, except for note 7 as to which the date is May 11, 2005, on our audit of the financial statements of Trinity Partners Acquisition Company Inc. as of December 31, 2004 and for the period from inception (April 14, 2004) to December 31, 2004. We also consent to the reference to our Firm under the caption "Experts" in this Registration Statement.
/s/ J.H. Cohn LLP New York, NY May 11, 2005 |