Exhibit 10.1

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (as the same may be amended or modified from time to time, this “ Agreement ”) is dated as of March 15, 2010 and is by and between Baltic Trading Limited, a Marshall Islands corporation (the “ Company ”), and Genco Shipping & Trading Limited, a Marshall Islands corporation (“ Genco ” or the “ Manager ”).

 

RECITALS

 

A. Genco recently formed the Company in anticipation of the Company’s initial public offering (the “ Public Offering ”) of shares of its Common Stock, par value $0.01 per share (“ Common Shares ”).

 

B. In order to provide the Company with commercial, technical, administrative and strategic services with respect to Vessels it may acquire and its business, the Company desires to engage the Manager to provide, directly or indirectly, such services to the Company, and the Manager desires to provide such services to the Company, on the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and premises of the Parties herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 Certain Definitions.  In this Agreement, including the recitals hereto, unless the context requires otherwise, the following terms shall have the respective meanings set forth below:

 

“ Accounting Referee ” has the meaning ascribed to such term in Section 8.3.

 

“ Administrative Services ” has the meaning ascribed to such term in Section 4.

 

“ Affiliates ” means, with respect to any Person as at any particular date, any other Persons that directly or indirectly, through one or more intermediaries, are Controlled by, Control or are under common Control with the Person in question, and “ Affiliate ” means any one of them.

 

“ Applicable Laws ” means, in respect of any Person, property, transaction or event, all laws, statutes, ordinances, regulations, municipal by-laws, treaties, judgments and decrees applicable to that Person, property, transaction or event, all applicable official directives, rules, consents, approvals, authorizations, guidelines, orders, codes of practice and policies of any Governmental Authority having authority over that Person, property, transaction or event and having the force of law, and all general principles of common law and equity.

 

“ Approved Budget ” has the meaning ascribed to such term in Section 4.4(c).

 

“ Board of Directors ” means the board of directors of the Company, as the same may be constituted from time to time.

 

“ Books and Records ” means all books of accounts and records, including tax records, sales and purchase records, Vessel records, computer software, formulae, business reports, plans and projections and all other documents, files, correspondence and other information of the Company with respect to the Vessels or the Business (whether or not in written, printed, electronic or computer printout form).

 

 

“ Business ” means the Company’s business of owning, operating and/or chartering or re-chartering Drybulk Carriers to other Persons and any other lawful act or activity customarily conducted in conjunction therewith.

 

“ Business Day ” means a day other than a Saturday, Sunday or statutory holiday on which the banks in New York, New York are required to close.

 

“ Cash Available for Distribution ” means net income less cash expenditures for capital items related to the Company’s fleet of Vessels, other than Vessel acquisitions.

 

“ Change of Control ” has the meaning ascribed to such term in Section 10.4.

 

“ Charter ” means a charter party agreement between a Company Group Member and any Person that relates to any of the Vessels (including any voyage or spot charters), and “ Charters ” means all such charter party agreements.

 

“ Charterer ” means any Person that has entered or enter into, or assumed or assume the obligations under, by novation or otherwise, a Charter with a Company Group Member.

 

“ Chief Financial Officer ” means the chief financial officer of the Company.

 

“ Common Shares ” has the meaning ascribed to such term in the recitals to this Agreement.

 

“ Class B Shares ” means shares of the Company’s Class B Stock, par value $0.01 per share.

 

“ Commercial Management Services ” has the meaning ascribed to such term in Section 3.2.

 

“ Commercial Management Services Fee ” has the meaning ascribed to such term in Section 8.1.

 

“ Company Breach ” has the meaning ascribed to such term in Section 10.4(b).

 

“ Company Group ” means the Company and its Subsidiaries.

 

“ Company Group Member ” means any member of the Company Group.

 

“ Company Indemnified Persons ” has the meaning ascribed to such term in Section 9.4.

 

“ Confidential Information ” means all nonpublic or proprietary information or data (including all oral and visual information or data recorded in writing or in any other medium or by any other method) relating to a Disclosing Party that is obtained from the Disclosing Party or any third party on the Disclosing Party’s behalf, at any time before, simultaneously with, or after the execution of this Agreement; and, without prejudice to the general nature of the foregoing definition, the term Confidential Information shall include, but not by way of limitation, (i) information regarding the Disclosing Party’s existing or proposed operations, business plans, market opportunities, and business affairs and (ii) any information ascertainable by inspection of Confidential Information disclosed to the Receiving Party or by the analysis of any materials supplied to the Receiving.  Notwithstanding the foregoing, Confidential Information shall not include any information which (x) is public knowledge at the time of disclosure or which subsequently becomes public knowledge other than as a result of a breach of this Agreement; (y) the Receiving Party can show was made available to it by some other Person who had a right to do so and who was not subject to any obligation of confidentiality or restricted use regarding such information; or (z) was developed by the Receiving Party independently without use of any confidential information provided hereunder or by a third party in breach of its confidentiality obligations.

 

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“ Continuing Directors ” means, as of any date of determination, any member of the Board of Directors who was (a) a member of the Board of Directors immediately after the completion of the Public Offering or (b) nominated for election or elected to the Board of Directors with the approval of a majority of the directors then in office who were either directors immediately after the completion of the Public Offering or whose nomination or election was previously so approved.

 

“ Control ” or “ Controlled ” means, with respect to any Person, the right to elect or appoint, directly or indirectly, a majority of the directors of such Person or a majority of the Persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such Person, or the possession of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of Voting Securities, by contract, or otherwise.

 

“ Costs and Expenses ” has the meaning ascribed to such term in Section 8.1.

 

“ Consumer Price Index ” means the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor, New York, N.Y. — Northeastern N.J. Area, All Items (1982-1984 = 100), or any successor index thereto, appropriately adjusted. In the event that the Consumer Price Index is converted to a different standard reference base or otherwise revised, the determination of amounts provided for in this Agreement shall be made with the use of such conversion factor, formula or table for converting the Consumer Price Index as may be published by the Bureau of Labor Statistics or, if said Bureau shall not publish the same, then with the use of such conversion factor, formula or table as may be published by Prentice-Hall, Inc., or any other nationally recognized publisher of similar statistical information. If the Consumer Price Index ceases to be published, and there is no successor thereto, such other index as the Manager may reasonably select shall be substituted for the Consumer Price Index.

 

“ Credit Facility ” means any credit facility agreement to which any Company Group Member may be a party from time to time.

 

“ Crew ” means the master, officers, employees and other crew members of a Vessel.

 

“ Crew Employment and Support Expenses ” means all Employment Expenses of the Crew and all expenses of a general nature that are not particularly connected to any individual member of the Crew or any individual Vessel that are incurred for the purpose of providing Crew Management Services 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, study pay, recruitment and interviews.

 

“ Crew Insurances ” means insurances against crew risks, including death, sickness, repatriation, injury, shipwreck, unemployment indemnity and loss of personal effects.

 

“ Crew Management Services ” has the meaning ascribed to such term in Section 3.3.

 

“ Designated Representative ” and “ Designated Representatives ” each have the meaning ascribed to such terms in Section 11.1.

 

“ Disclosing Party ” means a Party who has disclosed Confidential Information hereunder to the other Party or on whose behalf Confidential Information has been disclosed to the other Party.

 

“ Dispute ” has the meaning ascribed to such term in Section 11.1.

 

“ Dividend ” means any cash dividend paid by the Company on all outstanding Common Stock or Class B Stock, other than any Liquidating Dividends.

 

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“ Draft Budget ” has the meaning ascribed to such term in Section 4.4(a).

 

“Drybulk Carrier ”  means a vessel designed to carry bulk cargo, such as coal, iron ore and grain, that is loaded in bulk and not in bags, packages or containers.

 

“ Drybulk Carrier Assets ” means Drybulk Carriers and any assets that are customarily owned or operated in conjunction with Drybulk Carriers, in each case that are encompassed within the definition of the Business.

 

“ Employment Expenses ” means all costs, expenses, liabilities and obligations related to or incurred in respect of employment, including salaries, fees, wages, incentive pay, gratuities, bonuses, vacation pay, holiday pay, other paid leave, overtime, standby pay, sick pay, workers’ compensation contributions or costs, benefits and related costs, statutory contributions and remittances, pension plan contributions and costs, recruitment costs, Severance Costs, payroll and accounting costs, training and education costs, discounts, meals, accommodation, administrative costs, travel costs, perquisites, relocation expenses and uniform expenses.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Existing Ownership Group ” means Genco and all Affiliates thereof.

 

“ Fiscal Quarter ” means a fiscal quarter for the Company or, in the case of the fiscal quarter ending March 31, 2010, the portion of such fiscal quarter between the date of this Agreement and the commencement of the next fiscal quarter.

 

“ Fiscal Year ” means the fiscal year of the Company, being the twelve-month period ending December 31.

 

“ Force Majeure Event ” has the meaning ascribed to such term in Section 12.3.

 

“ GAAP ” means generally accepted accounting principles consistently applied in the United States.

 

“ Governmental Authority ” means any domestic or foreign government, including any federal, provincial, state, territorial or municipal government, any multinational or supranational organization, any government agency (including the SEC), any tribunal, labor relations board, commission or stock exchange (including the New York Stock Exchange), and any other authority or organization exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government.

 

“ Initial Expiration Date ” means the last day of the Fiscal Quarter that contains the fifteenth anniversary of the Initiation Date.

 

“ Initial Term ” has the meaning ascribed to such term in Section 10.1.

 

“ Initiation Date ” means the date on which the Company takes delivery of its first Vessel.

 

“ Insurances ” has the meaning ascribed to such term in Section 3.4.

 

“ ISM Code ” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organization by resolution A.741(18), as the same may have been or may be amended or supplemented from time to time.

 

“ ISPS Code ” means the International Ship and Port Facility Security Code adopted by the International Maritime Organization, as the same may have been or may be amended or supplemented from time to time.

 

“ Legal Action ” means any action, claim, complaint, demand, suit, judgment, investigation or proceeding, pending or threatened, by any Person or before any Governmental Authority.

 

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“ Lenders ” means the lenders, facility agent, security trustee, swap banks, swap agent or other financial institution contemplated by any Credit Facility.

 

“ License ” and “ Licenses ” each have the meaning ascribed to such terms in Section 3.1(p).

 

“ Liquidating Dividend ” means any dividend or other distribution in respect of any Common Stock or Class B Stock paid in connection with the liquidation, dissolution, bankruptcy or winding up of the Company, any merger of the Company or any sale or other conveyance of all or substantially all the assets of the Company.

 

“ Losses ” means losses, expenses, costs, liabilities and damages, excluding lost profits and consequential damages, but including interest charges, penalties, fines and monetary sanctions.

 

“ Management Services ” means, collectively, the Technical Services, the Administrative Services and the Strategic Services.

 

“ Management Fees ” has the meaning ascribed to such term in Section 8.1.

 

“ Manager Breach ” has the meaning ascribed to such term in Section 10.3(a).

 

“ Manager Indemnified Persons ” has the meaning ascribed to such term in Section 9.3.

 

“ Manager Misconduct ” has the meaning ascribed to such term in Section 9.1(a).

 

“ Manager’s Personnel ” means all individuals who are employed by or have entered into consulting arrangements with the Manager or any subcontractor under Section 2.3, other than the Crew.

 

“ Mediator’s Report ” has the meaning ascribed to such term in Section 11.2(c).

 

“ Omnibus Agreement ” means the Omnibus Agreement, dated as of March 15, 2010, between Genco and the Company, as the same may be amended or modified from time to time.

 

“ Other Financing Agreements ” has the meaning ascribed to such term in Section 4.2(c).

 

“ Parties ” means the Company and the Manager.

 

“ Person ” means an individual, corporation, limited liability company, partnership, joint venture, trust or trustee, unincorporated organization, association, Governmental Authority or other entity.

 

“ Pre-delivery Purchases and Expenses ” has the meaning ascribed to such term in Section 5.3.

 

“ Pre-delivery Services ” has the meaning ascribed to such term in Section 5.2.

 

“ Public Offering ” has the meaning ascribed to such term in the recitals to this Agreement.

 

“ President ” means the chief executive officer of the Company.

 

“ Questioned Items ” has the meaning ascribed to such term in Section 4.4(b).

 

“ Receiving Party ” means a Party to whom Confidential Information of a Disclosing Party has been disclosed hereunder.

 

“ Renewal Term ” has the meaning ascribed to such term in Section 10.2.

 

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“ SEC ” means the United States Securities and Exchange Commission.

 

“ Severance Costs ” means the termination or severance liabilities, costs and expenses that employers are legally obliged to provide or pay to or in respect of their employees, or the compensation or damages owed in lieu of such liabilities, costs and expenses, as a result of the termination of any employment.

 

“ STCW 95 ” means the International Convention on Standards of Training, Certification and Watchkeeping to Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto.

 

“ Stores and Equipment ” means the stores, spares, lubricating oil, supplies and equipment that customarily are considered part of a Drybulk Carrier for which a buyer would ordinarily reimburse a seller on the sale of such Drybulk Carrier, and does not include consumables that are not of incremental value to the Drybulk Carrier.

 

“ Strategic Opportunity ” has the meaning ascribed to such term in Section 5.1.

 

“ Strategic Services ” has the meaning ascribed to such term in Section 5.

 

“ Subsidiary ” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Persons Controlled by such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Person Controlled by such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, one or more Persons Controlled by such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Persons Controlled by such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.

 

“ Technical Services ” has the meaning ascribed to such term in Section 3.

 

“ Term ” means the Initial Term and any Renewal Term, in each case subject to any early termination of this Agreement as permitted herein.

 

“ Termination Payment” means an amount of cash equal to five times (a) aggregate Management Fees for the past five completed years of the Term as of the date of termination or such lesser number of completed years as has transpired divided by (b) five or such lesser number of completed years as has transpired; except that if this Agreement terminates in the first year of the Term, the Termination Payment shall equal five times $1,916,250, or $9,581,240.

 

“ Vessel s ” means the Drybulk Carriers owned by the Company or any of its Subsidiaries from time to time as set out in Schedule A , as the same may be amended from time to time in accordance with Section 2.8.

 

“ Voting Securities ” means securities of all classes of a Person entitling the holders thereof to vote on a regular basis in the election of members of the board of directors or other governing body of such Person.

 

1.2 Construction.   In this Agreement, unless the context requires otherwise:

 

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(a) references to laws and regulations refer to such laws and regulations as they may be amended from time to time, and references to particular provisions of a law or regulation include any corresponding provisions of any succeeding law or regulation;

 

(b) references to money refer to legal currency of the United States;

 

(c) “including” means “including, without limitation,” whether or not so expressed;

 

(d) words importing the singular include the plural and vice versa, and words importing gender include all genders; and

 

(e) a reference to an “approval,” “authorization,” “consent,” “notice” or “agreement” means an approval, authorization, consent, notice or agreement, as the case may be, in writing.

 

1.3 Headings.   All article or section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof.

 

2. ENGAGEMENT OF MANAGER

 

2.1 Engagement.   The Company hereby engages the Manager to provide, upon the Company’s request, the Management Services specified herein and, subject to the terms hereof, to manage each Vessel for and on behalf of the relevant Company Group Member, and the Manager hereby accepts such engagement, all in accordance with the terms of this Agreement. The Company and the Manager each acknowledge that to the extent set out in this Agreement, the Manager is acting solely on behalf of, as agent of and for the account of, the relevant Company Group Member. The Manager shall advise Persons with whom it deals on behalf of the relevant Company Group Member that it is conducting such business for and on behalf of such Company Group Member.

 

2.2 Powers and Duties of the Manager.   The Manager has the power and authority to take such actions on its own behalf or on behalf of the relevant Company Group Member as it from time to time considers necessary or appropriate to enable it to perform its obligations under this Agreement, subject to customary oversight and supervision of the Company, its Board of Directors and its executive officers. The Manager shall use its reasonable best efforts to provide the Management Services hereunder in a commercially reasonable manner and in accordance with customary ship management practice and with the care, diligence and skill that a prudent manager of Vessels such as the Vessels would possess and exercise, except that the Manager in the performance of its management responsibilities under this Agreement may have regard to its overall responsibility in relation to all Vessels as may from time to time be entrusted to its management and in particular, but without prejudice to the generality of the foregoing, the Manager may allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Manager, acting reasonably, considers to be fair and reasonable.

 

2.3 Ability to Subcontract.   The Manager may subcontract any of its duties and obligations hereunder to provide Management Services to any of its Affiliates without the consent of the Company and may subcontract its duties and obligations hereunder to provide Management Services to Persons that are not Affiliates with the prior written consent of the Company, not to be unreasonably withheld; provided, however, that the Manager may subcontract with any independent technical manager that the Manager has previously engaged for management of its own Vessels without the further consent of the Company.  In the event of any subcontract by the Manager, the Manager shall promptly notify the Company thereof and shall remain fully liable for the due performance of its obligations under this Agreement.  To the extent the Manager subcontracts any Management Services hereunder, the Company shall directly pay the relevant subcontractor all fees, costs, reimbursements, and other expenses payable to such subcontractor as the Manager may direct.

 

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2.4 Outside Activities.   The Company acknowledges that the Manager and its Affiliates may have business interests and engage in business activities in addition to those relating to the Company Group, for their own respective accounts and for the accounts of other Persons. The Manager and its Affiliates may undertake activities that compete with the activities of the Company Group.

 

2.5 Exclusive Appointment.   The Company acknowledges that the appointment of the Manager hereunder is an exclusive appointment for the Term. The Company shall not appoint other managers with respect to the Vessels or the Business during the Term, except in circumstances in which it is necessary to do so in order to comply with Applicable Law or as otherwise agreed by the Manager in writing. Notwithstanding the foregoing, this Section 2.5 shall not prohibit the Company from having its own employees perform Management Services.

 

2.6 Authority of the Parties.  Each Party represents to the other that it is duly authorized with full power and authority to execute, deliver and perform its obligations under this Agreement. The Company represents that the engagement of the Manager has been duly authorized by the Company and is in accordance with all governing documents of the Company.

 

2.7 Inspection of Books and Records.   At all reasonable times and on reasonable notice, any Person authorized by the Company may inspect, examine, copy and audit the Books and Records of the Company kept by the Manager pursuant to this Agreement.

 

2.8 Changes to Vessels Subject to this Agreement.   A list of Vessels subject to this Agreement as of the date hereof is set forth on Schedule A attached hereto. Unless otherwise agreed to by the Parties, all Drybulk Carriers that the Company may add to its fleet after the date hereof shall become subject to the engagement under this Agreement.  The Company, with reasonable notice to the Manager, may remove any Vessel from the engagement under this Agreement, provided that the Manager is being engaged to manage such Vessel under a separate agreement with the Company or the Manager otherwise consents to such removal. Notwithstanding the provisions of this Section 2.8, a Vessel shall automatically be removed from engagement under this Agreement upon a sale or, unless otherwise agreed to by the Parties, a total loss of such Vessel, and the Company may sell any Vessel subject to the engagement under this Agreement at any time in its sole discretion. Upon any addition of a Vessel to this engagement or any removal of a Vessel from this engagement, the Parties shall amend Schedule A to reflect such change.

 

3. TECHNICAL SERVICES

 

Subject to Section 9.2, the Manager shall, at its own expense, provide to the Company the services described in this Section 3 (collectively, the “ Technical Services ”).

 

3.1 Technical Vessel Management Services.   Commencing with the acquisition of each Vessel by any Company Group Member, the Manager shall provide all usual and customary Vessel technical management services with respect to the operation of such Vessel, including the following:

 

(a) supervising the day-to-day operation, maintenance, safety and general efficiency of the Vessel to ensure the seaworthiness and maintenance condition of the Vessel;

 

(b) arranging for and supervising general and routine repairs, alterations and maintenance of the Vessel;

 

(c) purchasing the necessary stores, spares, lubricating oil, supplies and equipment (other than such equipment as is covered by Section 9.2) for the operation of such Vessel;

 

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(d) appointing such surveyors, supervisors, technical consultants and other support for the Vessel on behalf of the relevant Company Group Member as the Manager may consider from time to time to be necessary;

 

(e) providing technical and shore-side support for the Vessel and attending to all other technical matters necessary for the operation of the Vessel;

 

(f) handling of the Vessel while in ports or transiting canals, either directly or by use of Vessel agents, unless otherwise handled by the Charterer;

 

(g) procuring and arranging for port entrance and clearance, pilots, Vessel agents, consular approvals, and other services necessary or desirable for the management and safe operation of the Vessel, unless otherwise procured or arranged by the Charterer;

 

(h) preparing, issuing (or causing to be issued) to shippers customary freight contracts, cargo receipts and bills of lading, unless prepared, issued or arranged for by the Charterer;

 

(i) performing all usual and customary duties relating to the loading and discharging of cargoes at all ports, unless performed by the Charterer;

 

(j) arranging for the prompt dispatch of the Vessel from loading and discharging ports in accordance with the instructions of the Charterer and for transit through canals;

 

(k) subject to Section 4.5(b), arranging for employment of counsel and the investigation, follow-up and negotiation of the settlement of all claims arising in connection with the operation of the Vessel;

 

(l) coordinating the Company’s payment of all ordinary charges incurred in connection with the management of the Vessel, including canal tolls, port charges, any amounts due to any Governmental Authority with respect to the Crew and all duties and taxes in respect of cargo or freight (whether levied against the Vessel or the Company), unless otherwise paid by the Charterer;

 

(m) promptly upon the Company’s request, reporting to the Company the Vessel’s movement, position at sea, arrival and departure dates, and major casualties and damages received or caused by the Vessel;

 

(n) informing the Company promptly of any release or discharge of oil or other hazardous material not in compliance with Applicable Laws;

 

(o) upon the Company’s request, providing the Company with a copy of any Vessel inspection reports, valuations, surveys, insurance claims and other similar reports prepared by ship brokers, valuators, surveyors, classification societies or insurers; and

 

(p) arranging for any and all licenses, permits, franchises, registrations and similar authorizations of any Governmental Authority that are necessary and used in the operation of the Vessel, the cost of which shall be paid directly by the Company (each a “ License ” and, collectively, the “ Licenses ”).

 

3.2 Commercial Management Services.   Commencing with the acquisition of each Vessel by any Company Group Member and subject to Section 2.5, the Manager shall provide all usual and customary commercial management services with respect to such Vessel, including the following (collectively, the “ Commercial Management Services ”):

 

(a) marketing and promoting the Vessel;

 

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(b) identifying, negotiating and securing Charterers and Charters and other employment for the Vessels for and on behalf of the relevant Company Group Member;

 

(c) monitoring proper payment to any Company Group Member or its nominee of all hire and freight revenues or other moneys of whatsoever nature arising out of the employment of the Vessel or otherwise in connection with the Vessel to which the Company or any Company Group Member may be entitled;

 

(d) providing voyage estimates and accounts and calculating and invoicing of hire, freights, demurrage and dispatch moneys due from or due to the Charterers of the Vessel;

 

(e) administering the Charters; and

 

(f) taking all other actions relating to commercial management of the Vessel as the Manager deems necessary to fulfill its obligations under this Agreement.

 

3.3 Crew Management Services.   Commencing with or, to the extent reasonably necessary for the provision of the Crew Management Services in an efficient manner, prior to the acquisition of each Vessel by a Company Group Member, the Manager shall provide all usual and customary crew management services in respect of such Vessel and shall manage all aspects of the employment of the Crew, including the following (collectively, the “ Crew Management Services ”):

 

(a) procuring, supervising and managing suitably qualified Crew, which in the opinion of the Manager is required for the Vessel in accordance with the STCW 95 requirements;

 

(b) recruiting, selecting, hiring and engaging the Vessel’s Crew, and arranging and paying, at its own expense, all compensation and administering payroll arrangements, pensions and other benefits and insurance for the Crew (including processing all claims);

 

(c) ensuring that the Applicable Laws of the flag of the Vessel and all places where the Vessel trades are satisfied in respect of manning levels, rank, qualification and certification of the Crew and employment regulations, including any statutory withholding tax requirements and social insurance requirements;

 

(d) 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 and, 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 shall be maintained for the duration of their service on board the Vessel;

 

(e) ensuring that the Crew have command of the English language at a sufficient standard to enable them to perform their duties effectively and safely;

 

(f) arranging for all transportation (including repatriation), board and lodging for the Crew as and when required at rates and types of accommodations as are customary in the industry;

 

(g) attending to and supervising the training, discipline, discharge and other terms and conditions of employment of the Crew;

 

(h) conducting all union negotiations for and on behalf of the Company pursuant to Section 4.5(c);

 

(i) administering the Company’s and the Manager’s drug and alcohol policies in respect of the Crew;

 

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(j) ensuring that any concerns of the Charterer with respect to the master or any of the officers or other members of the Crew are appropriately investigated in a timely manner, communicating the results of such investigations to the Charterer and the Company and, if such concerns are well-founded, ensuring that any appropriate remedial actions are promptly taken;

 

(k) keeping and maintaining full and complete records of any labor agreements that may be entered into with the Crew and reporting to the Company reasonably promptly after notice or knowledge thereof is received of any change or proposed change in labor agreements or other regulations relating to the Crew;

 

(l) negotiating the settlement of all wages with the Crew during the course of and upon termination of their employment;

 

(m) handling all details and negotiating the settlement of any and all claims of the Crew including those arising out of accidents, sickness, death, loss of personal effects, disputes under articles or contracts of enlistment, policies of insurance and fines;

 

(n) keeping and maintaining all administrative and financial records relating to the Crew as required by Applicable Law and any applicable labor or collective agreements of the Company or the Manager, and promptly rendering to the Company any and all reports when, as and in such form as reasonably requested by the Company; and

 

(o) performing any other function in connection with the Crew as may be reasonably requested by the Company from time to time.

 

3.4 Insurance.  The Manager shall arrange for insurance for each Vessel for and on behalf of the relevant Company Group Member against physical damage, total loss, third party liability and other risks normally insured against in accordance with industry practice, including the following (collectively with any additional insurances required under any Credit Facility, the “ Insurances ”):

 

(a) usual hull and machinery marine risks (including crew negligence) and excess liabilities;

 

(b) protection and indemnity risks (including pollution risks and Crew Insurances); and

 

(c) war risks (including protection and indemnity and crew risks);

 

each in accordance with the customary practice of prudent owners of Vessels of a similar type to each Vessel, with insurance companies, underwriters or associations in amounts and on terms that are in accordance with industry practice, and in any event, are no less than the market value of the Vessel (and in the case of protection and indemnity coverage, entered for the Vessel’s full gross tonnage). Notwithstanding the foregoing, the Manager shall not arrange for off-hire insurance for the Vessels unless requested by the Company.

 

The Manager shall arrange for and on behalf of the Company any such additional insurance required under any Credit Facility, including, as applicable, arranging for any of the Lenders thereto being named as “loss payee” or “additional insured” in accordance with the terms of any Credit Facility.

 

The relevant Company Group Member shall directly pay the relevant insurer all premiums and calls on the Insurances promptly and in any event by their due date. The Manager shall cooperate with the Company’s insurers and underwriters with respect to the investigation or settlement of claims by the relevant Company Group Member or any third party under the Insurances, including taking necessary

 

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steps to have repairs contemplated in Section 9.2(a) covered by the applicable insurance policy or policies.

 

3.5 Drydocking, Repairs and Improvements.  Subject to Section 9.2, the Manager shall arrange for and supervise the drydockings, repairs, alterations and maintenance of each Vessel to the standards required to ensure that such Vessel will comply, in all material respects, with the laws of the flag of such Vessel and of the jurisdictions where such Vessel trades and all requirements and recommendations of the applicable classification society.  The Company shall directly pay the relevant third party providing drydocking , repair, alteration or maintenance services all fees and costs for the same.

 

3.6 Regulatory Compliance Services.   The Manager shall operate and maintain the Vessels, and take all actions necessary to ensure that each Vessel is, in compliance with all Applicable Laws, including the laws of the applicable flag each Vessel may bear, the Applicable Laws of the countries to which the Vessels trade and with the requirements of the relevant classification society, the ISM Code and the ISPS Code.

 

4. ADMINISTRATIVE SERVICES

 

The Manager shall, at its own expense, provide to the Company the services described in this Section 4 (collectively, the “ Administrative Services ”).

 

4.1 Accounting and Records.   The Manager shall, on behalf of the Company, establish an accounting system, including the development, implementation, maintenance and monitoring of internal control over financial reporting and disclosure controls and procedures, and maintain Books and Records, with such modifications as may be necessary to comply with Applicable Laws. The Books and Records shall contain particulars of receipts and disbursements relating to the Company’s assets and liabilities and shall be kept pursuant to normal commercial practices that will permit financial statements to be prepared for the Company in accordance with GAAP. The Books and Records shall be the property of the Company but shall be kept at the Manager’s primary office or such other place as the Company and the Manager may mutually agree. Upon expiration or termination of this Agreement, all of the Books and Records shall be provided to the Company or a new manager pursuant to Section 10.5(e).

 

4.2 Reporting Requirements.   The Manager shall prepare and deliver to the President and the Chief Financial Officer the following reports, which the Manager shall use its reasonable best efforts to prepare and deliver within the time periods specified below or, if not so specified, within the time period requested by the relevant party:

 

(a) a quarterly report to be delivered within 45 days of the end of each Fiscal Quarter setting out the interim financial results of the Company for such quarter and for the applicable Fiscal Year through the end of such Fiscal Quarter;

 

(b) a draft of the reports, certificates, documents and other information required under any Credit Facility and any other financing arrangements of the Company (“ Other Financing Agreements ”) to be delivered at least two Business Days prior to their required delivery to the Lenders or lenders under Other Financing Agreements;

 

(c) as and when requested by the Board of Directors, the President or the Chief Financial Officer, draft reports regarding financial and other information required in connection with Applicable Laws (including annual and other reports that may be required to be filed under the Exchange Act and all other Applicable Laws); and

 

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(d) as and when reasonably requested by the Company from time to time, such other reports with respect to financial and other information of the Company.

 

4.3 Financial Statements and Tax Returns.   At the instruction of the Chief Financial Officer, the Manager shall prepare and deliver for review by the Chief Financial Officer and the Audit Committee of the Board of Directors the following which the Manager shall use its reasonable best efforts to prepare and deliver within the time periods specified below or, if not so specified, within the time period requested by the relevant party:

 

(a) within 30 days of the end of each Fiscal Quarter, unaudited financial statements of the Company for such Fiscal Quarter, to be reviewed by the external auditors of the Company, prepared in accordance with GAAP and the rules and regulations of the SEC, on a consolidated basis with all Subsidiaries of the Company;

 

(b) within 40 days of the end of each Fiscal Year, financial statements of the Company for such Fiscal Year, to be audited by the external auditors of the Company, prepared in accordance with GAAP and the rules and regulations of the SEC, on a consolidated basis with all Subsidiaries of the Company; and

 

(c) tax returns for the Company and all of its Subsidiaries required to be filed by Applicable Laws.

 

Notwithstanding the foregoing, in the event that the Company’s reporting obligations are accelerated under the Exchange Act beyond what such obligations are at the time of the Public Offering, the Manager shall use its reasonable best efforts to provide to the Company the financial statements referred to in clauses (a) and (b) above within such periods as shall be required for the Company to comply with any reporting requirements under the Exchange Act or other similar applicable laws and regulations.

 

In addition, the Manager shall attend to the time calculation and payment of all taxes payable by the Company. At the instruction of the Chief Financial Officer, the Manager shall cause the Company’s external accountants to review the Company’s unaudited financial statements, audit the Company’s annual financial statements and finalize tax returns. The Manager shall make available to the Company’s accountants the relevant Books and Records for the Company and shall assist the accountants in their duties.

 

4.4 Budgets and Corporate Planning.

 

(a) Draft Budgets

 

On or before December 15 of each year, the Manager, in consultation with the President and the Chief Financial Officer, shall prepare and submit to the Board of Directors a detailed draft budget for the next Fiscal Year in a format acceptable to the Board of Directors and generally used by the Manager, which shall include: (1) a statement of estimated revenue and expenses, including Costs and Expenses; and (2) a proposed budget for capital expenditures, repairs and alterations, including proposed expenditures in respect of drydockings, together with an analysis as to when and why such expenditures, repairs and alterations may be required (the “ Draft Budget ”).

 

(b) Process for Finalizing the Draft Budget.

 

For a period of seven (7) days after receipt of the Draft Budget, the Board of Directors may request further details and submit written comments on the Draft Budget. If, after reviewing the Draft Budget, the Company does not agree with any term thereof, the Company shall, within the same seven (7) day period, give the Manager notice of such disagreements and terms (the “ Questioned Items ”) and a proposal for resolution of each such Questioned Item. The Company and the Manager shall endeavor to resolve any

 

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such differences between them with respect to the Questioned Items. In resolving any Questioned Item, the Company and the Manager shall consider, among other things, the Company’s obligations under any relevant Charters, Credit Facility, or Other Financing Agreement.

 

(c) Approved Budget.

 

The Manager shall use its commercially reasonable efforts to prepare and deliver to the Company a revised budget that has been approved by the Board of Directors (the “ Approved Budget ”) by December 31 of the preceding Fiscal Year. However, the Company acknowledges that the Approved Budget is only an estimate of the performance of the Vessels and the Manager makes no assurance, representation or warranty that the actual performance of the Vessels in the applicable Fiscal Year will correspond to the estimates contained in the Approved Budget for such Fiscal Year. The Parties acknowledge that any projections contained in the Approved Budget are subject to and may be affected by changes in financial, economic and other conditions and circumstances beyond the control of the Parties.

 

(d) Amendments to Approved Budget.

 

The Manager may, from time to time, in any Fiscal Year propose amendments to the Approved Budget upon at least fifteen (15) days prior notice to the Company, in which event the Company shall have the right to approve the amendments in accordance with the process set out in Section 4.4(b), with the relevant time periods being amended accordingly. Whenever, due to circumstances beyond the reasonable control of the Manager, emergency expenditures are required to ensure that any Vessels are operated and maintained as required under any applicable Charters, the Manager may make such emergency expenditures and reasonably request prompt reimbursement thereof, to the extent that such items are the responsibility of the Company, including pursuant to Sections 5.4 and 9.2, even if such expenditures are not included or reflected in the Approved Budget.

 

4.5 Legal and Securities Compliance Services.

 

(a) Responsibilities of the Manager.

 

The Manager shall assist the Company with the following items, whether or not related to any of the Vessels:

 

(i) compliance with all Applicable Laws, including all relevant securities laws and the rules and regulations of the SEC, the New York Stock Exchange and any other securities exchange upon which the Company’s securities are listed;

 

(ii) arranging for the provision of advisory services to the Company with respect to the Company’s obligations under applicable securities laws in the United States and disclosure and reporting obligations under applicable securities laws, including the preparation for review, approval and filing by the Company of reports and other documents with the SEC and all other applicable regulatory authorities;

 

(iii) maintaining the Company’s corporate existence and good standing in all necessary jurisdictions and assisting in all other corporate and regulatory compliance matters;

 

(iv) conducting investor relations functions on behalf of the Company; and

 

(v) adjusting and negotiating settlements, with or on behalf of claimants or underwriters, of any claim, damages for which are recoverable under insurance policies.

 

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(b) Administration and Settlement of Legal Actions.

 

If any Legal Action is commenced against or is required to be commenced in favor of any Company Group Member or any of the Vessels, the Manager shall arrange for the commencement or defense of such Legal Action, as the case may be, in the name of, on behalf of and at the expense of the Company Group Member, including retaining and instructing legal counsel, investigating the substance of the Legal Action and entering pleadings with respect to the Legal Action. The Manager shall assist the Company in administering and supervising any such Legal Actions and shall keep the Company advised of the status thereof. The Manager may settle any Legal Action on behalf of a Company Group Member where the amount of settlement is less than $500,000 with the approval of the President or the Chief Financial Officer and, in excess of such amount, with the approval of the Board of Directors.

 

(c) Labor Relations Proceedings.

 

For Legal Actions in favor of or against any Company Group Member that relate to labor relations or employment proceedings, strikes or collective bargaining, the Manager shall represent the Company Group Member in any such labor relations or employment proceedings and shall undertake any labor relations or employment negotiations in respect of any of the Vessels or any Company Group Member on behalf of such Company Group Member, should such representation or negotiations be required, with such labor organization or other Person that becomes lawfully entitled to represent the Crew. The Manager shall keep the Company advised of the progress of any such labor relations proceedings or negotiations. The Manager may enter into collective bargaining agreements and other labor or employment agreements and any material amendments thereto; provided, however, that such agreements and amendments must be approved by the Board of Directors if the terms and conditions of any such agreements or amendments are inconsistent, in a material and adverse way to the Company Group Member, with other collective bargaining agreements concerning or in respect of the Crew.

 

(d) Interaction with Regulatory Authorities.

 

Notwithstanding anything in this Section 4 or otherwise, the Manager shall not act for or on behalf of the Company in its relationships with regulatory authorities except to the extent specifically authorized by the Company from time to time.

 

4.6 Bank Accounts.

 

(a) Administration by Manager.

 

The Manager shall oversee banking services for the Company and shall establish in the name of the Company an operating account, a retention account and such other accounts with such financial institutions as the Company may request. The Manager shall administer and manage all of the Company’s cash and accounts, including making any deposits and withdrawals reasonably necessary for the management of its business and day-to-day operations. The Manager shall promptly deposit all moneys payable to the Company and received by the Manager into a bank account held in the name of the Company.

 

(b) Payments from Operating Account.

 

The Company shall ensure that all charter hire associated with each Charter is paid by the applicable Charterer into the operating account. Unless otherwise instructed by the Company, the Manager shall instruct the financial institutions at which the accounts have been established to pay from the operating account, as and when required, amounts payable under any Credit Facility or Other Financing Agreement.

 

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4.7 License.   The Manager shall procure, and the Company shall enter into, a license agreement that permits the Company to use the “Genco” name and trademark in connection with its business.

 

4.8 Other Administrative Services.

 

The Manager shall:

 

(a) develop, maintain and monitor internal audit controls, disclosure controls and information technology for the Company;

 

(b) assist with arranging board meetings and preparing board and committee meeting materials, including, as applicable, agendas, discussion papers, analyses and reports;

 

(c) prepare and provide such reports and accounting information so as to permit the Board of Directors to determine the amount of the Company’s Cash Available for Distribution and Dividends to the Company’s stockholders, and to assist the Company in making arrangements with the Company’s transfer agent for the payment of Dividends to the stockholders;

 

(d) obtain, on behalf of the Company, general insurance, director and officer liability insurance and other insurance of the Company not related to the Vessels that would normally be obtained for a company in a similar business to that of the Company;

 

(e) administer payroll services, benefits and directors fees, as applicable, for the Crew, the President and the Chief Financial Officer and any other employee, officer or director of the Company;

 

(f) provide office space and office equipment for personnel of the Company at the location of the Manager or as otherwise reasonably designated by the Company, and clerical, secretarial, accounting and administrative assistance as may be reasonably necessary;

 

(g) provide all administrative services required in connection with any Credit Facility or Other Financing Agreement;

 

(h) negotiate loan and credit terms with lenders in the ordinary course and monitor and maintain compliance therewith;

 

(i) negotiate and arrange for interest rate swap agreements, foreign currency contracts and forward exchange contracts;

 

(j) monitor the performance of investment managers;

 

(k) at the request and under the direction of the Company, handle all administrative and clerical matters in respect of (i) the call and arrangement of all annual and special meetings of stockholders, (ii) the preparation of all materials (including notices of meetings and proxy or similar materials) in respect thereof and (iii) the submission of all such materials to the Company in sufficient time prior to the dates upon which they must be mailed, filed or otherwise relied upon so that the Company has full opportunity to review, approve, execute and return them to the Manager for filing or mailing or other disposition as the Company may require or direct;

 

(l) provide, at the request and under the direction of the Company, such communications to the transfer agent for the Company as may be necessary or desirable;

 

(m) make recommendations to the Company for the appointment of auditors, accountants, legal counsel and other accounting, financial or legal advisers, and technical, commercial, marketing or other

 

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independent experts; provided, however, that nothing herein shall permit the Manager to engage any such adviser or expert for the Company without the Company’s specific approval;

 

(n) attend to all matters necessary for any reorganization, bankruptcy or insolvency petitions or proceedings, liquidation, dissolution or winding up of the Company;

 

(o) attend to all other administrative matters necessary to ensure the professional management of the Company’s business or as reasonably requested by the Company from time to time.

 

5. STRATEGIC SERVICES

 

The Manager shall, at its own expense and upon the Company’s reasonable request, provide to the Company the services described in this Section 5 (collectively, the “ Strategic Services ”).

 

5.1 Acquisitions, Charter Parties and Finance.   The Manager shall provide strategic, corporate planning, business development and advisory services to the Company, including the following:

 

(a) providing general strategic planning services and implementing corporate strategy, including developing acquisition and divestiture strategies;

 

(b) identifying, negotiating and securing opportunities for the Company to acquire or to construct Drybulk Carriers, and negotiating and carrying out the purchase of existing and any newbuilding Drybulk Carriers;

 

(c) (i) identifying, negotiating and securing opportunities for the Company to acquire or merge with companies or other Persons that own or operate Drybulk Carriers or are otherwise involved in the drybulk shipping industry, (ii) negotiating and carrying out the purchase of such companies or other Persons, and (iii) working to integrate any such acquired businesses;

 

(d) maintaining and managing relationships between the Company and the Charterers and potential charterers, shipbuilders, insurers, Lenders and potential financiers of the Company and other shipping industry participants;

 

(e) arranging, negotiating and procuring pre-delivery and post-delivery financing or refinancing for the construction of any Drybulk Carriers and financing or refinancing for the acquisition of existing Drybulk Carriers;

 

(f) identifying, negotiating and implementing potential divestitures or dispositions of any of the Vessels and any other of the Company’s Drybulk Carrier Assets, and evaluating and recommending the sale of all or any part of the Business;

 

(g) identifying, investigating and implementing tax planning, leasing or other tax savings initiatives;

 

(h) assisting the Company in connection with any future offerings of Common Shares or other securities the Company may determine is desirable, all under the direction and supervision of the Board of Directors, the President, and the Chief Financial Officer;

 

(i) subject to the oversight of the Board of Directors and supervision of the President and the Chief Financial Officer, generally undertaking the day-to-day management of the Business; and

 

(j) providing such other strategic, corporate planning, business development and advisory services as the Company may reasonably request from time to time.

 

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If, pursuant to the provision of Strategic Services, the Manager identifies a potential opportunity for the Company (“ Strategic Opportunity ”) and subject to allocations of corporate opportunities to Genco pursuant to the Company’s Articles of Incorporation and the Omnibus Agreement, (i) the Manager shall present the Strategic Opportunity to the President and the Chief Financial Officer for further consideration and presentation to the Board of Directors, and (ii) the Board of Directors or an appropriate committee thereof shall approve or reject the Strategic Opportunity.

 

5.2 Pre-delivery Services.   For the acquisition of any Vessel, the Manager shall oversee and supervise, in all material respects, the construction of any newbuilding Vessel or the acquisition of any existing Vessel to be purchased and made subject to this Agreement, as the case may be, prior to its delivery, including the following (collectively, the “ Pre-delivery Services ”), as applicable:

 

(a) negotiating the shipbuilding contract and specifications and related documentation;

 

(b) attending to plan approval for the design of the newbuilding Drybulk Carrier;

 

(c) arranging for and supervising alterations and changes to the newbuilding Drybulk Carrier;

 

(d) liaising with the ship builder, supervising the ship builder’s progress and overseeing construction to ensure the ship builder is constructing the newbuilding Drybulk Carrier in accordance with the relevant shipbuilding contract, design and specifications;

 

(e) negotiating the purchase and sale agreement and related documentation;

 

(f) liaising with classification societies, suppliers and other service providers;

 

(g) procuring, supervising and managing suitably qualified Crew to test the Vessel in the water prior to delivery;

 

(h) attending to the purchasing and other activities related to the Pre-delivery Purchases and Expenses; and

 

(i) arranging for registration of the Vessel under the relevant flag and in accordance with Applicable Laws and registration of the Vessel with the relevant classification society and other authorities as may be required for obtaining trading, canal and other marine certificates for the Vessel.

 

5.3 Pre-delivery Purchases and Expenses.   Prior to the delivery to the relevant Company Group Member of any Vessel, the Manager shall arrange for provision of the necessary stores, spares, lubricating oil, supplies, equipment and services related to the delivery of the Vessel (all of which will be set out by the Manager in a pre-delivery budget for each Vessel, which shall be subject to the acknowledgment and consent of the Company) to ensure the seaworthiness and readiness for service of each such Vessel, and the Company shall pay for the fees associated with the relevant classification society or the registration of the Vessel in the name of the relevant Company Group Member under the relevant flag, whether a newbuilding or an existing Vessel

 

5.4 Estimates and Consultation.   For each newbuilding Drybulk Carrier, if any, the Manager shall consult with and obtain the approval of the Company with respect to all material decisions to be made regarding the newbuilding. The Manager shall also consult with the Company regarding, and provide to the Company an estimate of the cost of, the Pre-delivery Services and the various Pre-delivery Purchases and Expenses for any Vessel provided other than by the Manager, for approval by the Company reasonably in advance of such services being provided or such items being purchased.

 

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6. EMPLOYEES AND MANAGER’S PERSONNEL

 

6.1 Manager’s Personnel .  The Manager shall provide the Management Services hereunder through the Manager’s Personnel and the Crew. The Manager shall be responsible for all aspects of the employment or other relationship of the Manager’s Personnel and Crew as required in order for the Manager to perform its obligations hereunder, including recruitment, training, staffing levels, compensation and benefits, supervision, discipline and discharge, and other terms and conditions of employment or contract. However, the Manager shall remain directly responsible and liable to the Company to carry out all of its obligations under this Agreement, whether performed directly or subcontracted to another Person, and the Manager (and not the Company) shall be responsible for the compensation and reimbursement of all such other Persons.

 

6.2 Officers

 

(a) Executive Officers.   The Manager shall regularly consult with the President and Chief Financial Officer as to the provision of Management Services and the Company’s Business. The Manager shall make available to the Company such executive officers to which the Company and the Manager or its Affiliates may agree, who shall assist in managing the day-to-day operations and affairs of the Company. Notwithstanding the foregoing, the Company may employ directly any other officers or employees as it may deem necessary, and any such officers and employees will not be subject to this Agreement.

 

(b) Termination and Replacement of Executive Officers.   The Board of Directors may require any officer that is provided by the Manager of its Affiliates as an executive officer (or otherwise to perform the duties of an executive officer) of the Company to be relieved of his or her duties with respect to, and no longer perform any of the Management Services for, the Company for any reason not prohibited by Applicable Laws. Such officer may continue to be employed by the Manager but shall no longer provide any Management Services hereunder, unless otherwise agreed by the Parties.

 

If any officer who is made available to the Company by the Manager or any of its Affiliates, as the case may be, resigns, is terminated or otherwise vacates his or her office, the Manager shall, as soon as practicable after acceptance of any resignation or after such termination and upon the Company’s request, use commercially reasonable efforts to identify suitable candidates for replacement of such officer for the approval by the Board of Directors.

 

(c) Other Duties of the Manager’s Personnel.   The Company acknowledges that any officers provided by the Manager and the other Manager’s Personnel that provide Management Services may engage in business activities of the Manager and its Affiliates that are unrelated to the Company and that conflicts of interest may exist.

 

(d) Reporting Structure.   The President and the Chief Financial Officer shall report to and be under the direction of the Board of Directors. The Manager shall report to the Company and the Board of Directors through the President or the Chief Financial Officer.

 

7. COVENANTS OF THE MANAGER

 

The Manager hereby agrees and covenants with the Company that, during the Term, the Manager shall:

 

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(a) obtain and maintain for its benefit professional indemnity insurance and other insurance as is reasonable having regard to the nature and extent of the Manager’s obligations under this Agreement;

 

(b) exercise all due care, skill and diligence in carrying out its duties under this Agreement as required by Applicable Laws;

 

(c) provide the President, the Chief Financial Officer, and the Board of Directors with all information in relation to the performance of the Manager’s obligations under this Agreement as the President, the Chief Financial Officer, or the Board of Directors may reasonably request;

 

(d) use its reasonable best efforts to have all material property of the Company clearly identified as such, held separately from property of the Manager and, where applicable, in safe custody;

 

(e) use its reasonable best efforts to have all property of the Company (other than money to be deposited to any bank account of the Company) transferred to or otherwise held in the name of the Company or any nominee or custodian appointed by the Company;

 

(f) use its reasonable best efforts to cause (i) the Company to own or possess all Licenses that are necessary and used in the operation of its business as of the date hereof, (ii) all such Licenses to be in full force and effect at all times, and (iii) all required filings with respect to such Licenses to be timely made and all required applications for renewal thereof to be timely filed;

 

(g) use its reasonable best efforts to retain at all times a qualified staff so as to maintain a level of expertise sufficient to provide the Management Services; and

 

(h) use its reasonable best efforts to keep full and proper books, records and accounts showing clearly all transactions relating to its provision of Management Services in accordance with established general commercial practices and in accordance with GAAP, and allow the Company and its representatives to audit and examine such books, records and accounts at any time during customary business hours.

 

8. MANAGER’S COMPENSATION AND REIMBURSEMENT

 

8.1 Fees for Management Services; Reimbursement.   In consideration for the provision of Management Services by the Manager to the Company, the Company shall pay the Manager the amounts set forth on Schedule B hereto in accordance with Section 8.2 ( “Management Fees” ).  In addition, the Company shall reimburse the Manager for (a) all of the reasonable direct and indirect costs and expenses incurred by the Manager and its Affiliates in providing Management Services and (b) the pro rata portion of the salary and other costs incurred by the Manager in employing and compensating an internal auditor who will be made available to the Company on a part time basis.

 

8.2 Invoicing.   The Manager shall, in good faith, determine the expenses related to the Management Services that are allocable to the Company Group in any reasonable manner determined by the Manager and shall provide to the Company on a quarterly basis an invoice for the Costs and Expenses to be paid under Section 8.1, which invoice shall contain a description in reasonable detail of the Costs and Expenses that comprise the aggregate amount of the payment being invoiced. The Manager shall maintain the records of all Costs and Expenses incurred, including any invoices, receipts and supplementary materials as are necessary or proper for the settlement of accounts between the Parties. The Company shall pay such invoices within thirty (30) days of receipt, unless the invoice is being disputed in accordance with this Agreement.

 

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8.3 Dispute of Invoice.   If the Company, in good faith, disputes the amount of an invoice, the Company shall give written notice of such dispute (including the particulars of such dispute) to the Manager on or before the due date with respect to all or any portion of such invoice. Upon receipt of such notice, the Manager shall furnish the Company with additional supporting documentation to reasonably substantiate the amount of the invoice or the Performance Fee calculation, as applicable. Upon delivery of such additional documentation, the Company and the Manager shall cooperate in good faith and use commercially reasonable efforts to resolve such dispute. If they are unable to resolve the dispute within (i) ten (10) Business Days of the delivery of such additional supporting information (in the case of an invoice) or (ii) five (5) days of such delivery (in the case of the Performance Fee calculation), the dispute shall be referred for resolution to a firm of independent accountants of nationally recognized standing in the United States reasonably satisfactory to each of the Manager and the Company (the “ Accounting Referee ”), which shall determine the disputed amounts within thirty (30) days of the referral of such invoice dispute to such Accounting Referee, or within ten (10) days of the referral of such Performance Fee calculation dispute. The determination of the Accounting Referee shall not require the Company to pay more than the amount in dispute nor require the Manager to return any amount previously paid by the Company. The fees and expenses of the Accounting Referee shall be borne equally by the Company and the Manager. If any invoice dispute is resolved in favor of the Manager, the Company shall make payment to the Manager within ten (10) days of resolution of the dispute. Notwithstanding the foregoing, in no event shall the Company be entitled to withhold any amounts other than those portions of the applicable payment that are in dispute.

 

8.4 Direction to Pay.   By written notice to the Company, the Manager may direct the Company to pay any amounts owing under this Agreement directly to an Affiliate of the Manager pursuant to a subcontracting arrangement relating to this Agreement.

 

9. LIABILITY OF THE MANAGER; INDEMNIFICATION

 

9.1 Liability of the Manager.   The Manager shall not be liable to the Company for any Loss (including but not limited to loss of profit arising out of or in connection with arrest, detention of or delay to any Vessel) arising from the Management Services unless and to the extent that such Loss resulted from:

 

(a) the fraud, gross negligence, recklessness or willful misconduct of the Manager or any of its Affiliates (other than the Company Group) or any of their respective employees, agents or subcontractors (“ Manager Misconduct ”); or

 

(b) any breach of this Agreement by the Manager of any of its Affiliates (other than the Company Group).

 

Notwithstanding anything that may appear to the contrary in this Agreement, the Manager shall not be responsible for any of the actions of the crew of any Vessel even if such actions are negligent, grossly negligent or willful.

 

9.2 Extraordinary Costs and Capital Expenditures.  Notwithstanding anything to the contrary in this Agreement, the Manager shall not be responsible for paying any costs, liabilities and expenses in respect of a Vessel to the extent that such costs, liabilities and expenses are “extraordinary,” which consist of the following:

 

(a) repairs, refurbishment or modifications resulting from maritime accidents, collisions, other accidental damage or unforeseen events (except to the extent that such accidents, collisions, damage or events are due to Manager’s Misconduct, unless and to the extent otherwise covered by insurance);

 

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(b) drydocking of a Vessel;

 

(c) any improvement, upgrade or modification to, structural changes with respect to or the installation of new equipment aboard any Vessel that results from a change in, an introduction of new, or a change in the interpretation of, Applicable Laws at the recommendation of the classification society for that Vessel or otherwise;

 

(d) any increase in Crew Employment and Support Expenses resulting from a change in, an introduction of new, or a change in the interpretation of, Applicable Laws; or

 

(e) any other similar types of costs, liabilities and expenses that were not reasonably contemplated by the Company and the Manager as being a component of the Approved Budget for the applicable Fiscal Year.

 

9.3 Manager Indemnification.   The Company shall indemnify and save harmless the Manager and its directors, officers, employees, subcontractors and Affiliates (the “ Manager Indemnified Persons ”) from and against any and all Losses incurred or suffered by the Manager Indemnified Persons by reason of or arising from or in connection with their performance of this Agreement or any third-party Legal Action brought or threatened against such Manager Indemnified Persons in connection with their performance of this Agreement, other than for any Losses to the extent related to or that resulted from:

 

(a) any liabilities or obligations that the Manager has agreed to pay or for which the Manager is otherwise expressly responsible under this Agreement;

 

(b) Manager Misconduct; or

 

(c) any breach of this Agreement by the Manager or any of its Affiliates (other than the Company Group).

 

9.4 Company Indemnification .  The Manager shall indemnify and save harmless each Company Group Member and such Company Group Member’s directors, officers, employees, subcontractors and Affiliates (the “ Company Indemnified Persons ”) from and against any and all Losses incurred or suffered by the Company Indemnified Persons, to the extent related to or that resulted from:

 

(a) any liabilities or obligations that the Manager has agreed to pay or for which the Manager is otherwise expressly responsible under this Agreement;

 

(b) Manager Misconduct; or

 

(c) any breach of this Agreement by the Manager or any of its Affiliates (other than the Company Group).

 

9.5 Limitation Regarding Crew

 

Notwithstanding anything to the contrary in this Agreement, the Manager shall not be liable for any of the actions of the Crew, even if such actions are negligent, grossly negligent or willful, except only to the extent that they are shown to have resulted from a breach by the Manager of any of its obligations under Section 3.3, in which case the Manager’s liability shall be determined in accordance with the terms of this Section 9.

 

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10. TERM AND TERMINATION

 

10.1 Initial Term.   The initial term of this Agreement shall commence on March 15, 2010 and end on the Initial Expiration Date, unless terminated earlier pursuant to this Agreement (the “ Initial Term ”).

 

10.2 Renewal Term.    This Agreement will, without any further act or formality on the part of either Party, on the expiration of the Initial Term or any Renewal Term, be automatically renewed for a further term of five (5) years (each a “ Renewal Term ”) unless notice of termination is given by the Company to the Manager in accordance with Section 10.3(f), in the case of the Initial Term, or Section 10.3(g), in the case of any Renewal Term.

 

10.3 Termination by the Company.   This Agreement may be terminated by the Company:

 

(a) if, at any time, the Manager materially breaches this Agreement and the matter is unresolved after ninety (90) days pursuant to the dispute resolution procedures set forth in Section 11 (“ Manager Breach ”);

 

(b) if, at any time,

 

(i) the Manager has been convicted of, has entered a plea of guilty or nolo contendere with respect to, or has entered into a plea bargain or settlement admitting guilt for, a crime, which conviction, plea bargain or settlement is demonstrably and materially injurious to the Company; and

 

(ii) the holders of a majority of the outstanding Common Shares elect to terminate this Agreement;

 

(c) if, at any time, the Manager becomes insolvent, admits in writing its inability to pay its debts as they become due, is adjudged bankrupt or declares bankruptcy or makes an assignment for the benefit of creditors, a proposal or similar action under the bankruptcy, insolvency or other similar laws of any applicable jurisdiction, or commences or consents to proceedings relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction;

 

(d) if any Person or group of Persons other than Peter C. Georgiopoulos acquires Control or economic control of the Manager in contravention of Section 12.2;

 

(e) if, in the Fiscal Quarter that is four Fiscal Quarters before the Fiscal Quarter that contains the tenth anniversary of the Initiation Date, two-thirds of the Board of Directors elect to terminate the Agreement, which termination shall be effective on the last day of the Fiscal Quarter that contains the tenth anniversary of the Initiation Date;

 

(f) if, in the Fiscal Quarter  that is four Fiscal Quarters before the Fiscal Quarter that contains the Initial Expiration Date, the Company elects to terminate the Agreement by notice to the Manager, which termination shall be effective on the Initial Expiration Date; or

 

(g) if, in the fourth calendar quarter of any twelve-month period immediately preceding the twelve month period that includes the end of any Renewal Term, the Company elects to terminate the Agreement by notice to the Manager, which termination shall be effective at the end of such Renewal Term.

 

10.4 Termination by the Manager.   This Agreement may be terminated by the Manager:

 

(a) after the fifth anniversary of the Public Offering, with twelve (12) months’ prior notice by the Manager to the Company;

 

(b) if, at any time, the Company materially breaches the Agreement and the matter is unresolved after ninety (90) days pursuant to the dispute resolution procedures set forth in Section 11 (“ Company Breach ”); or

 

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(c) at any time upon the earlier of (i) the occurrence of a Change of Control of the Company or (ii) the Manager’s receipt of written notice from the Company that such a Change of Control will occur until sixty (60) days after the later of (x) the occurrence of such a Change of Control or (y) the Manager’s receipt of the written notice in the preceding clause (ii).   If the Company has knowledge that a Change of Control of the Company will occur, the Company shall give prompt written notice thereof to the Manager.  A “ Change of Control ” means the occurrence of any of the following:

 

(A) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the Company’s assets, except such a disposition to a member of the Existing Ownership Group;

 

(B) an order made for, or the adoption by the Board of Directors of a plan of, liquidation or dissolution of the Company;

 

(C) the consummation of any transaction (including any merger or consolidation) the result of which is that any “person” (as such term is used in Section 13(d)(3) of the Exchange Act) becomes the beneficial owner, directly or indirectly, of a majority of the Company’s Voting Securities (unless such “person” is a member of the Existing Ownership Group), measured by voting power rather than number of shares;

 

(D) if, at any time, the Company becomes insolvent, admits in writing its inability to pay its debts as they become due, is adjudged bankrupt or declares bankruptcy or makes an assignment for the benefit of creditors, or makes a proposal or similar action under the bankruptcy, insolvency or other similar laws of any applicable jurisdiction or commences or consents to proceedings relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction;

 

(E) the consolidation of the Company with, or the merger of the Company with or into, any “person” (other than a member of the Existing Ownership Group), or the consolidation of any “person” (other than a member of the Existing Ownership Group) with, or the merger of any “person” (other than a member of the Existing Ownership Group) with or into, the Company, in any such event pursuant to a transaction in which any of the Common Stock or Class B Stock outstanding immediately prior to such transaction are converted into or exchanged for cash, securities or other property or receive a payment of cash, securities or other property, other than any such transaction where the Company’s Voting Securities outstanding immediately prior to such transaction are converted into or exchanged for Voting Securities of the surviving or transferee “person” constituting a majority (measured by voting power rather than number of shares) of the outstanding Voting Securities of such surviving or transferee “person” immediately after giving effect to such issuance; or

 

(F) a change in directors after which a majority of the members of the Board of Directors are not Continuing Directors.

 

10.5 Effects of Termination or Expiry of this Agreement.   (a) If the Manager terminates this Agreement pursuant to Section 10.4(a), the Company shall have the option to require the Manager to continue to provide Technical Services to the Company, for the fee described in Section 8.1, for up to an additional two-year period from the date of termination of this Agreement.

 

(b) If the Company terminates this Agreement pursuant to any of Sections 10.3(e) through 10.3(g), or the Manager terminates this Agreement pursuant to Section 10.4(b) or Section 10.4(c), the Company shall pay to the Manager the Termination Payment in a lump sum amount, payable within 30 days following the date this Agreement terminates.

 

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(d) Upon termination of this Agreement for any reason or expiry of this Agreement or upon the Manager otherwise ceasing to manage a Vessel under this Agreement, with respect to the Stores and Equipment provided by the relevant Company Group Member or the Manager, as applicable, the following shall occur:

 

(i) in the case of any Vessel where the necessary Stores and Equipment were provided by the Manager, at the time of delivery of such Vessel to the relevant Company Group Member, the Company or such Company Group Member shall reimburse the Manager for the fair market value (as of the time of such termination, expiry or cessation) of the Stores and Equipment that had been placed on board the Vessel by the Manager, taking into account reasonable wear and tear (such value to be proposed by the Manager and subject to approval by the Company), except that if such Vessel is to be scrapped immediately following such termination, expiry or cessation, the Manager shall use commercially reasonable efforts to sell, re-use or recycle the Stores and Equipment and any compensation received by the Manager in doing so shall be deducted from the amounts to be reimbursed by the Company or such Company Group Member to the Manager; and

 

(ii) in the case of any Vessel where the necessary Stores and Equipment were provided by the relevant Company Group Member, at the time of delivery of such Vessel to such Company Group Member, the Manager shall either, at the Company’s option, (A) return the Vessel with materially the same level and complement of Stores and Equipment as required to continue operating the Vessel in accordance with customary ship operation and practice that a prudent owner of a Vessel such as the Vessel would deem reasonably necessary, taking into account reasonable wear and tear, or (B) pay to the Company or such Company Group Member an amount representing the amount of Stores and Equipment needed to be added to existing levels to satisfy the levels described in subclause (A) above (such amount to be proposed by the Manager and subject to approval by the Company); provided, however, that if such Vessel is to be scrapped immediately following such termination, expiry or cessation, the Manager shall be required to make the payment contemplated in subclause (B) above.

 

Until any of the foregoing events arise, neither any Company Group Member nor the Manager shall have any obligation to each other to account for any diminution in value of the Stores and Equipment.

 

(e) Upon termination or expiry of this Agreement, this Agreement will be void and there shall be no liability on the part of any Party (or their respective officers, directors, employees or Affiliates) except that the obligation of the Company to pay to the Manager or its Affiliates the amounts accrued but outstanding under Section 8 and the terms and conditions set forth in Sections 9, 10.6 and 12.4 shall survive such termination. After a written notice of termination has been given under this Section 10 or upon expiry, the Company may direct the Manager to, at the cost of the Company (subject to Section 10.5(d)), undertake any actions reasonably necessary to transfer any aspect of the ownership or control of the assets of the Company to the Company or to any nominee of the Company and to do all other things reasonably necessary to bring the appointment of the Manager to an end at the appropriate time, and the Manager shall promptly comply with all such reasonable directions. Upon termination or expiry of this Agreement, the Manager shall promptly deliver to any new manager or the Company any Books and Records held by the Manager under this Agreement and shall execute and deliver such instruments and do such things as may reasonably be required to permit the new manager of the Company to assume its responsibilities.

 

11. DISPUTE RESOLUTION

 

11.1 Notice of Dispute.   If (a) a dispute or disagreement arises between the Parties with respect to any provision of this Agreement (other than Section 8.3), including its interpretation or the performance of a Party under this Agreement or (b) (i) the Company in good faith believes that a Manager Breach has occurred or is reasonably likely to occur or (ii) the Manager in good faith believes that a Company Breach

 

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has occurred or is reasonably likely to occur (each of the foregoing, as well as any inability of the Parties to agree, pursuant to Section 8.1, upon the adjusted Commercial Management Services Fee by the date sixty (60) days prior to January 1 of the year in which such adjusted fee is scheduled to take effect, being a “ Dispute ”), either Party may, or the Party alleging such breach or potential breach shall, deliver written notice to the other Party. Such notice shall contain in detail the specific facts and circumstances relating to the Dispute. With respect to any Dispute described in clause (a) or (b) above, each Party shall designate an individual to negotiate and resolve the Dispute (each a “ Designated Representative ” and, together, the “ Designated Representatives ”). The Designated Representatives shall in good faith attempt to resolve the matter within a thirty (30) day period from the date of delivery of the notice referred to above. If either Designated Representative intends to be accompanied by counsel at any meeting, such Designated Representative shall give the other Designated Representative at least three (3) Business Days’ notice. All discussions and negotiations pursuant to this Section 11 shall be confidential and without prejudice to settlement negotiations.

 

11.2 Mediation.   If a Dispute described in clause (a) or (b) of Section 11.1 is not resolved by the Designated Representatives during after the thirty (30) days provided in Section 11.1, either of the Parties may refer the matter to mediation. Any Dispute relating to the determination of an adjusted Commercial Management Services Fee (a “ Commercial Management Services Fee Dispute ”) shall be referred to mediation. With respect to the mediation of any Dispute, the mediator shall be mutually agreed upon by the Parties, and such mediator will be instructed to:

 

(a) review the terms of the Dispute and the position of the Parties;

 

(b) consider the terms of and context of this Agreement; and

 

(c) render a non-binding report within sixty (60) days (20 days in the case of a Commercial Management Services Fee Dispute) of the appointment of the mediator (the “ Mediator’s Report ”) or such later date as to which the Parties may agree.

 

The Parties shall consider the Mediator’s Report and may mutually decide to make it a binding report. If the mediator is not able to facilitate a binding agreement between the Parties, the Dispute is not resolved to the satisfaction of the Parties as a result of the Mediator’s Report or a mediator cannot be chosen mutually by the Parties, the Dispute shall be submitted to binding arbitration pursuant to Section 11.3.

 

11.3 Arbitration.   Any Dispute not resolved by the Parties pursuant to Section 11.1 or 11.2 shall be fully and finally resolved by binding arbitration pursuant to this Section 11.3. Either Party may refer the Dispute to arbitration, which shall take place in New York, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association before a single arbitrator. The prevailing Party in any such arbitration shall be entitled to costs, expenses and reasonable attorneys’ fees, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

 

12. GENERAL

 

12.1 Assignment; Binding Effect.   The Parties may not assign any of their respective rights under this Agreement in whole or in part without the prior written consent of the other Party, which consent may be withheld in the sole discretion of such other Party. This Agreement is binding upon and inures to the benefit of the Parties and their successors and permitted assigns.

 

12.2 Change of Control of the Manager.   If any Person or group of Persons acting in concert (other than Affiliates of Genco) proposes to acquire Control of the Manager, directly or indirectly, the Manager shall provide at least thirty (30) days’ written notice of the change of Control to the Company, which

 

26

 

notice shall identify the Person that will acquire, directly or indirectly, Control of the Manager. A change of Control of the Manager may occur only with the consent of the Company, which consent shall not be unreasonably withheld or delayed.

 

12.3 Force Majeure.   Neither of the Parties shall be under any liability for any failure to perform any of their obligations hereunder if any of the following occurs (each a “ Force Majeure Event ”):

 

(a) any event, cause or condition which is beyond the reasonable control of either or both of the Parties and which prevents either or both of the Parties from performing any of their respective obligations under this Agreement;

 

(b) acts of God, including fire, explosions, unusually or unforeseeably bad weather conditions, epidemic, lightening, earthquake or tsunami;

 

(c) acts of public enemies, including war or civil disturbance, vandalism, sabotage, terrorism, blockade or insurrection;

 

(d) acts of a Governmental Authority, including injunction or restraining orders issued by any judicial, administrative or regulatory authority, expropriation or requisition;

 

(e) government rule, regulation or legislation, embargo or national defense requirement; or

 

(f) labor troubles or disputes, strikes or lockouts, including any failure to settle or prevent such event which is in the control of any Party.

 

A Party shall give written notice to the other Party promptly upon the occurrence of a Force Majeure Event.

 

12.4 Confidentiality.   (a)  Each Receiving Party agrees:

 

(i)            to use any Confidential Information solely to carry out its obligations or exercise its rights under this Agreement  (the “ Purpose ”) and for no other purpose;

 

(ii)           to copy and make other works based on Confidential Information only as strictly necessary for the Purpose;

 

(iii)          to maintain the confidentiality of the Confidential Information using at least the same degree of care that the Receiving Party uses for its own confidential or proprietary information of a similar nature, but no less than reasonable care;

 

(iv)          to reveal any Confidential Information to any third party without the prior written consent of the Disclosing Party, except that if the Receiving Party is required by law, court or administrative order or regulation to reveal any Confidential Information, the Receiving Party is permitted to do so provided that the Receiving Party gives the Disclosing Party reasonable prior written notice (if permitted) of the required disclosure and cooperate with the Disclosing Party at its expense in seeking a protective order or other relief;

 

(v)           to limit disclosure of the Confidential Information to such of your officers and employees as is necessary for the Purpose;

 

(vi)          to inform each officer and employee who receives any Confidential Information of the restrictions as to use and disclosure of Confidential Information contained herein and to be responsible for any breach of such restrictions by any such persons;

 

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(vii)         Forthwith upon the Disclosing Party’s request, to procure the return of all Confidential Information together with any copies, abstracts, or other works which contain or are based on any of the Confidential Information; provided that, notwithstanding the foregoing, the Receiving Party shall be permitted to retain Confidential Information to the extent it is required to retain such Confidential Information pursuant to law, court or administrative order or regulation;

 

(b) Each Receiving Party further acknowledges that any breach of the provisions of this Agreement would result in serious damage being sustained by the Disclosing Party, and as a result hereby unconditionally agrees:

 

(i)            To be responsible for losses, damages or expenses (including without limitation attorneys’ fees and expenses) that have been determined to have been caused by any such breach; and

 

(ii)           That the Disclosing Party shall be entitled to equitable relief (including without limitation injunctive relief) in relation to any threatened or actual breach of the provisions of this Agreement without any requirement of posting a bond and without limiting any other remedy that may be available to the Disclosing Party.

 

12.5 Notices.   Each notice, consent or request required to be given to a Party pursuant to this Agreement must be given in writing. A notice may be given by delivery to an individual or by fax, and shall be validly given if delivered on a Business Day to an individual at the following address, or, if transmitted on a Business Day, by fax or email addressed to the following Party:

 

(a)	if to the Company:	(b)	if to the Manager:
	Address:   299 Park Avenue, 20 th  Floor		Address:  299 Park Avenue, 20 th  Floor
	New York, NY 10171		New York, NY 10171
	Attention:  John C. Wobensmith		Attention:  Robert Gerald Buchanan
	President and Chief Financial Officer		President
	Fax No.:    (646) 443-8551		Fax No.:    (646) 443-8551

 

or to any other address or fax number that the Party so designates by notice given in accordance with this Section. Any notice

 

(a) if validly delivered on a Business Day, shall be deemed to have been given when delivered; and

 

(b) if validly transmitted by fax on a Business Day, shall be deemed to have been given on that Business Day.

 

12.6 Third Party Rights.   The provisions of this Agreement are enforceable solely by the Parties to this Agreement, and no shareholder, employee, agent of any Party or any other Person shall have the right to enforce any provision of this Agreement or to compel any Party to this Agreement to comply with the terms of this Agreement.

 

12.7 No Partnership.   Nothing in this Agreement is intended to create or shall be construed as creating a partnership or joint venture between the Parties, and this Agreement shall not be deemed for any purpose to constitute any Party a partner of any other Party to this Agreement in the conduct of any business or otherwise or as a member of a joint venture or joint enterprise with any other Party to this Agreement.

 

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12.8 Severability.   Each provision of this Agreement is several. If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, the illegality, invalidity or unenforceability of that provision will not affect:

 

(a) the legality, validity or enforceability of the remaining provisions of this Agreement; or

 

(b) the legality, validity or enforceability of that provision in any other jurisdiction;

 

except that if:

 

(x) on the reasonable construction of this Agreement as a whole, the applicability of the other provision presumes the validity and enforceability of the particular provision, the other provision will be deemed also to be invalid or unenforceable; and

 

(y) as a result of the determination by a court of competent jurisdiction that any part of this Agreement is unenforceable or invalid and, as a result of this Section 12.8, the basic intentions of the Parties in this Agreement are entirely frustrated, the Parties shall use commercially reasonable efforts to amend, supplement or otherwise vary this Agreement to confirm their mutual intention in entering into this Agreement.

 

12.9 Governing Law; Jurisdiction; Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts executed in and to be performed in that state, and each party hereto agrees to submit to the non-exclusive jurisdiction of the federal or state courts located in the City, County and State of New York as regards any claim or matter arising under or in connection with this Agreement.  Each of the Parties hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this agreement or the transactions contemplated hereby, in the federal or state courts located in the City, County and State of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum or seek to change the venue from any such court.

 

12.10 Amendments.    No amendment, supplement, modification or restatement of any provision of this Agreement shall be binding unless it is in writing and signed by each Person that is a Party to this Agreement at the time of the amendment, supplement, modification or restatement.

 

12.11 Entire Agreement.   This Agreement constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

 

12.12 Waiver.   No failure by any Party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or of any other covenant, duty, agreement or condition. Any waiver must be specifically stated as such in writing.

 

12.13 Counterparts.   This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on the Parties.

 

[Remainder of This Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Management Agreement has been duly executed by the Parties as of the date first written above.

 

BALTIC TRADING LIMITED			GENCO SHIPPING & TRADING LIMITED
By:	/s/ John C. Wobensmith		By:	/s/ John C. Wobensmith
Name:	John C. Wobensmith		Name:	John C. Wobensmith
Title:	President and Chief Financial Officer		Title:	Chief Financial Officer

 

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SCHEDULE A
VESSELS

 

(As of March 15, 2010)

 

This Schedule may be updated from time to time as the Parties in accordance with Section 2.8.

 

Capacity

Current

Current

Expiration

Vessel

(dwt)

Built

Employment

Charterer

of Charter

Flag

None

 

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SCHEDULE B

 

MANAGEMENT FEES

 

Commercial services fee:  For the provision of Commercial Management Services, the Company shall pay the Manager a fee of 1.25% of all gross charter revenues generated by each Vessel.

 

Technical services fee:  For the provision of Technical Services (excluding Commercial Management Services), the Company shall pay the Manager a fee for technical services provided to the Company equal to $750 per Vessel per day.   Such $750 amount shall be subject to increase on each anniversary of the date hereof based on the total percentage increase, if any, in the Consumer Price Index over the immediately preceding twelve months of the Term.

 

Sale & purchase fee:  Upon consummation of the sale or purchase of a Vessel, the Company shall pay the Manager a fee equal to 1% of the gross purchase or sale price.

 

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Exhibit 10.2

 

OMNIBUS AGREEMENT

 

This OMNIBUS AGREEMENT (this “ Agreement ”), is entered into as of March 15, 2010, by and between Genco Shipping & Trading Limited, a Marshall Islands corporation (“ Genco ”) and Baltic Trading Limited, a Marshall Islands corporation (“ Baltic ”).  The foregoing shall be referred to individually as a “ Party ” and collectively as the “ Parties .”  Certain capitalized terms have the meanings assigned to them in Article I hereof.

 

RECITALS

 

A.  Genco has formed Baltic for the purpose of, among other things, acquiring, owning and operating certain drybulk vessels that trade in the spot market or on spot market-related time charters.

 

B.  The respective Boards of Directors of Genco and Baltic have authorized the Parties to enter into this Agreement and effect the actions set forth below.

 

C.  The Parties desire, in connection with the proposed initial public offering (the “ Offering ”) of Baltic, to undertake the transactions contemplated by this Agreement, including, without limitation, the allocation of certain business opportunities between (i) Genco and its affiliates other than the Baltic Group members and (ii) the Baltic Group members.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the Parties undertake and agree as follows:

 

ARTICLE I
DEFINITIONS; RECORDATION

 

1.01         Definitions .  In addition to terms defined above or elsewhere in this Agreement, the following capitalized terms have the meanings given below.

 

An “ affiliate ” of any Person means any other Person which directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such Person.  The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) as used with respect to any Person means the possession, directly or indirectly, of 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.  A person who is the owner of 20% or more of the outstanding voting shares of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.

 

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“ Articles of Incorporation ” means the Amended and Restated Articles of Incorporation of Baltic, as they may be further amended from time to time.

 

“ Baltic Group ” means, collectively, Baltic and its subsidiaries.

 

“ Business Day ” means a day other than a Saturday, Sunday or statutory holiday on which the banks in New York, New York are required to close.

 

“ Common Stock ” means the Common Stock, par value $0.01 per share, of Baltic.

 

“ Class B Stock ” means the Class B Stock, par value $0.01 per share, of Baltic, which entitles the holder thereto to the voting and other rights as set forth in the Articles of Incorporation.

 

“ Person ” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation or any other entity.

 

“ Registration Rights Agreement ” means the Registration Rights Agreement, to be entered into between Genco and Baltic, in substantially the form of Exhibit A attached hereto.

 

“ Trip Charter ” means a time charter for a trip to carry a specific cargo from a load port to a discharge port at a set daily rate.

 

“ Voyage Charter ” means a charter for the carriage of a specific cargo from a load port to a discharge port at an agreed upon freight rate expressed on a U.S. dollar-per-ton basis.

 

ARTICLE II
ALLOCATION OF BUSINESS OPPORTUNITIES AND RIGHTS OF FIRST REFUSAL

 

2.01         Allocation of Business Opportunities .  Baltic and Genco hereby agree that Genco may engage (and shall have no duty to refrain from engaging) in the same or similar activities or lines of business as the Baltic Group members, including conducting business in the drybulk spot market, and none of the Baltic Group members shall be deemed to have an interest or expectancy in any business opportunity, transaction or other matter (including, without limitation, any opportunity to acquire a drybulk vessel) (each such opportunity, transaction or other matter being a “ Business Opportunity ”) in which Genco engages or seeks to engage merely because any Baltic Group member engages in the same or similar activities or lines of business as that involved in or implicated by such Business Opportunity.

 

2.02         Right of First Refusal .  Subject to the terms and conditions specified in this Article II:

 

(a)                                   if Genco, its affiliates, any Baltic Group member, or any director or officer of the foregoing acquires knowledge of a potential Business Opportunity that may be deemed to constitute a corporate opportunity of both Genco and a Baltic Group

 

2

 

member, Genco shall have a right of first refusal to pursue or acquire such Business Opportunity for itself unless such Business Opportunity is a Spot Charter Opportunity (defined below); and

 

(b)                                  if Genco, its affiliates, any Baltic Group member, or any director or officer of the foregoing acquires knowledge of a potential opportunity to enter into a Voyage Charter or a Trip Charter for a particular drybulk vessel (a “ Spot Charter Opportunity ”) that may be deemed to constitute a corporate opportunity of both Genco and a Baltic Group member, Baltic shall have a right of first refusal to elect to pursue or acquire such Spot Charter Opportunity for itself.

 

Each time Genco or a Baltic Group member, as applicable (the “ Offering Party ”) acquires knowledge of a Business Opportunity for which the other Party (the “ ROFR Party ”) has a right of first refusal, the Offering Party must first make an offering of the Business Opportunity to the ROFR Party in accordance with the following provisions of this Article II prior to pursuing such Business Opportunity.

 

2.03         Offer Notice .  The Offering Party shall give written notice (the “ Offering Notice ”) to the ROFR Party stating that it has identified a corporate opportunity and providing a description of the opportunity, including all material terms and conditions of which the Offering Party has knowledge.

 

2.04         Exercise of Right of First Refusal .

 

(a)                                   Upon receipt of the Offering Notice, the ROFR Party shall have twenty-four (24) hours if the Business Opportunity is a Spot Charter Opportunity or fourteen (14) calendar days if the Business Opportunity is not a Spot Charter Opportunity (the “ ROFR Notice Period ”) to elect to pursue the Business Opportunity by delivering a written notice to the Offering Party stating that the ROFR Party will pursue the Opportunity (a “ ROFR Notice ”).

 

(b)                                  If the ROFR Party does not deliver a ROFR Offer Notice during the ROFR Notice Period, it shall be deemed to have waived all of its rights to pursue the Business Opportunity under this Article II , and the Offering Party shall thereafter be free to pursue the Business Opportunity specified in the Offer Notice without any further obligation to such Party pursuant to this Article II .

 

2.05         Limitation on Duty to Notify .  If the ROFR Party is the first to learn of a Business Opportunity, then neither the ROFR Party nor its directors or officers shall have any duty to communicate or offer such Business Opportunity to the Offering Party.

 

2.06         Vessel Pools .  As the entry of a drybulk vessel by one Party into a vessel pool would not prevent the other Party from taking the same action, neither Party shall have any obligation under Sections 2.02 through 2.04 hereunder with respect to the entry of any drybulk vessel into a vessel pool.

 

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2.07         Definitions .  For purposes of this Article II only (a) the term “ Baltic Group ” shall mean Baltic and all persons or entities in which Baltic beneficially owns, directly or indirectly, 50% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests, and (b) the term “ Genco ” shall mean Genco and all persons or entities (other than the Baltic Group, as defined in accordance with clause (a) of this Section 2.07 ) (i) in which Genco beneficially owns, directly or indirectly, 50% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests or (ii) which otherwise are affiliates of Genco.

 

ARTICLE III
CREDIT FACILITIES

 

In order to comply with the provisions of Genco’s existing credit facility on the date hereof and any future credit facility of Genco, Baltic shall:

 

(a)                                   not issue any shares of preferred stock without the prior written consent of Genco; and

 

(b)                                  use commercially reasonable efforts not to take any action that would result in an event of default under Genco’s existing credit facility as of the date hereof or the terms of any future credit facility Genco may enter into to the extent such terms impose no greater restrictions on Genco’s affiliates than such existing credit facility.

 

ARTICLE IV
MISCELLANEOUS

 

4.01         Term; Termination .  This agreement shall continue in full force and effect until the date that (a) Genco ceases to beneficially own shares of Common Stock and Class B Stock representing at least 10% of the aggregate number of outstanding shares of Common Stock and Class B Stock of Baltic and (b) no person who is a director or officer of any Baltic Group member is also a director or officer of Genco or any of its affiliates other than the Baltic Group members.  Notwithstanding the foregoing, no addition to, alteration of or termination of Article II shall eliminate or impair the effect of Article II on any act, omission, right or liability that occurred prior thereto.

 

4.02         Enforcement .  Each Party agrees and acknowledges that the other Parties do not have an adequate remedy at law for the breach by any such Party of its covenants and agreements set forth in Article II , and that any breach by any such Party of its covenants and agreements set forth in Article II would result in irreparable injury to such other Parties.  Each Party further agrees and acknowledges that any other Party may, in addition to the other remedies which may be available to such other Party, file a suit in equity to enjoin such Party from such breach, and consent to the issuance of injunctive relief to enforce the provisions of Article II of this Agreement.

 

4.03         Integration .  This Agreement and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to the subject matter hereof.  This Agreement and such instruments contain the entire understanding of the Parties with respect to the subject matter hereof and thereof.  No

 

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understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the Parties hereto after the date of this Agreement.

 

4.04         Headings; References; Interpretation .  All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof.  The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All references herein to Articles and Sections shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement, respectively.  All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa.  The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” “but not limited to,” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.

 

4.05         Successors and Assigns .  The Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

 

4.06         No Third Party Rights .  The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.

 

4.07         Counterparts .  This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on the parties hereto.

 

4.08         Governing Law .  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, applicable to contracts made and to be performed wholly within such jurisdiction without giving effect to conflict of law principles thereof other than Section 5-1401 of the New York General Obligations Law.

 

4.09         Severability .  If any of the provisions of this Agreement is held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any governmental body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement.  Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision added so as to give effect, as nearly as possible, to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

 

4.10         Deed; Bill of Sale; Assignment .  To the extent required and permitted by applicable Law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the Assets.

 

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4.11         Amendment or Modification .  This Agreement may be amended or modified from time to time only by the written agreement of all the Parties hereto; provided , however , that the prior approval of the Conflicts Committee of the Board of Directors of Baltic shall be required for any proposed amendment that would, in the reasonable determination of Baltic’s Board of Directors, adversely affect the holders of Common Stock (other than Genco).

 

4.12         Notices .   Each notice, consent or request required to be given to a Party pursuant to this Agreement must be given in writing. A notice may be given by delivery to an individual or by fax, and shall be validly given if delivered on a Business Day to an individual at the following address, or, if transmitted on a Business Day, by fax or email addressed to the following Party:

 

(a)	if to Baltic:	(b)	if to Genco:
	Address:   299 Park Avenue, 20 th  Floor		Address:   299 Park Avenue, 20 th  Floor
	New York, NY 10171		New York, NY 10171
	Attention:  John C. Wobensmith		Attention:  Robert Gerald Buchanan
	President and Chief Financial Officer		President
	Fax No.:    (646) 443-8551		Fax No.:    (646) 443-8551

 

or to any other address or fax number that the Party so designates by notice given in accordance with this Section. Any notice

 

(a) if validly delivered on a Business Day, shall be deemed to have been given when delivered; and

 

(b) if validly transmitted by fax on a Business Day, shall be deemed to have been given on that Business Day.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Omnibus Agreement has been duly executed by the parties set forth below.

 

 

	GENCO SHIPPING & TRADING LIMITED
	By:	/s/ John C. Wobensmith
		Name:  John C. Wobensmith
		Title:  Chief Financial Officer
	BALTIC TRADING LIMITED
	By:	/s/ John C. Wobensmith
		Name:  John C. Wobensmith
		Title:  President and Chief Financial Officer

 

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT is dated as of March 15, 2010 and is by and between BALTIC TRADING LIMITED, a Marshall Islands corporation (the “ Company ”), and GENCO INVESTMENTS LLC, a Marshall Islands limited liability company (the “ Stockholder ”).

 

In consideration of the mutual covenants and agreements herein contained and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

 

1.              Certain Definitions.

 

(a)            In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings:

 

(b)            “ Affiliate ” of any Person means any other Person which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person.

 

(c)            “ Agreement ” means this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to this Registration Rights Agreement as the same may be in effect at the time such reference becomes operative.

 

(d)            “ Class B Stock ” means shares of the Class B Stock, par value $0.01 per share, of the Company.

 

(e)            “ Common Stock ” means shares of Common Stock, par value $0.01 per share, of the Company, including Common Stock issuable upon conversion of Class B Stock and any other shares into which such shares are converted pursuant to a recapitalization or reorganization.

 

(f)             “ Company ” has the meaning set forth in the introductory paragraph.

 

(g)            “ Control ,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise. A person who is the owner of 20% or more of the outstanding voting shares of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.

 

(h)            “ Demand Registration ” has the meaning set forth in Section 2(a)  hereof.

 

 

(i)             “ Dissolution ” has the meaning set forth in Section 9 hereof.

 

(j)             “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

(k)            “ Governmental Entity ” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

 

(l)             “ Holder ” means any person that owns Registrable Shares, including such successors and assigns as acquire Registrable Shares, directly or indirectly, from such Person.  For purposes of this Agreement, the Company may deem and treat the registered holder of Registrable Shares as the Holder and absolute owner thereof, and the Company shall not be affected by any notice to the contrary.

 

(m)           “ Initiating Holders ” has the meaning set forth in Section 2(a)  hereof.

 

(n)            “ Person ” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated or unincorporated organization, association, corporation, institution, public benefit corporation, Governmental Entity or any other entity.

 

(o)            “ Piggyback Registration ” has the meaning set forth in Section 4(a)  hereof.

 

(p)            “ Prospectus ” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

 

(q)            “ Qualifying IPO ” means the sale in an underwritten initial public offering registered under the Securities Act of shares of Common Stock of the Company.

 

(r)             “ Registrable Shares ” means shares of Common Stock held by the Stockholder or Affiliates of the Stockholder (excluding natural persons) or shares of Common Stock receivable upon the conversion of Class B Stock held by the Stockholder or Affiliates of the Stockholder (excluding natural persons) or any shares of any successor or acquiror of the Company issued in exchange or substitution for any of the foregoing in connection with any acquisition, merger, combination, or similar transaction involving the Company; provided , however , Registrable Shares shall not include any securities sold by a Person to the public either pursuant to a Registration Statement or Rule 144 or any securities that may be sold pursuant to Rule 144 without restriction.

 

(s)            “ Registration Expenses ” has the meaning set forth in Section 7(a)  hereof.

 

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(t)             “ Registration Statement ” means any registration statement of the Company which covers any of the Registrable Shares pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.

 

(u)            “ SEC ” means the Securities and Exchange Commission.

 

(v)            “ Securities Act ” means the Securities Act of 1933, as amended.

 

(w)           “ Senior Management ” means the Chief Executive Officer, President and/or Chief Financial Officer of the Company.

 

(x)             “ Shelf Registration ” has the meaning set forth in Section 3(a)  hereof.

 

(y)            “ Stockholder ” has the meaning set forth in the introductory paragraph.

 

(z)             “ Suspension Notice ” has the meaning set forth in Section 6(f)  hereof.

 

(aa)          “ underwritten registration ” or “ underwritten offering ” means a registration in which securities of the Company are sold to underwriters for reoffering to the public.

 

(bb)          “ Withdrawn Demand Registration ” has the meaning set forth in Section 2(f)  hereof.

 

2.              Demand Registrations.

 

(a)            Right to Request Registration .  At any time commencing 180 days following the closing of a Qualifying IPO, any Holder or Holders of either (i) a number Registrable Shares equal to at least 50% of the number of Registrable Shares as of the date hereof or (ii) Registrable Shares having an aggregate market value of at least $25 million at the time of request may request registration under the Securities Act (“ Initiating Holders ”) of all or part of the Registrable Shares (“ Demand Registration ”); provided , however , that each Demand Registration be for Registrable Shares.

 

Within ten (10) days after receipt of any such request for Demand Registration, the Company shall give written notice of such request to all other Holders of Registrable Shares and shall, subject to the provisions of Section 2(d)  hereof, include in such registration all such Registrable Shares with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the receipt of the Company’s notice.

 

(b)            Number of Demand Registrations .  Subject to the provisions of Section 2(a) , the Initiating Holders of Registrable Shares shall collectively be entitled to request an aggregate of three (3) Demand Registrations.  A registration shall not count as one of the permitted Demand Registrations (i) until it has become effective, (ii) if the Initiating Holders requesting such registration are not able to have registered and sold at least 50% of the Registrable Shares

 

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requested by such Initiating Holders to be included in such registration or (iii) in the case of a Demand Registration that would be the last permitted Demand Registration requested hereunder, if the Initiating Holders requesting such registration are not able to have registered and sold all of the Registrable Shares requested to be included by such Initiating Holders in such registration.

 

(c)            Priority on Demand Registrations .  The Company shall not include in any Demand Registration any securities which are not Registrable Shares without the written consent of the Holders of a majority of the Registrable Shares to be included in such registration, or, if such Demand Registration is an underwritten offering, without the written consent of the managing underwriters.  If the managing underwriters of the requested Demand Registration advise the Company in writing that in their opinion the number of shares of Registrable Shares proposed to be included in any such registration exceeds the number of securities which can be sold in such offering without having an adverse affect on such offering, including the price at which such Registrable Shares can be sold, the Company shall include in such registration only the number of shares of Registrable Shares which in the opinion of such managing underwriters can be sold without having the adverse effect referred to above.  If the number of shares which can be sold without having the adverse effect referred to above is less than the number of shares of Registrable Shares proposed to be registered, the amount of Registrable Shares to be so sold shall be allocated pro rata among the Holders of Registrable Shares desiring to participate in such registration on the basis of the amount of such Registrable Shares initially proposed to be registered by such Holders.  If the number of shares which can be sold exceeds the number of shares of Registrable Shares proposed to be sold, such excess shall be allocated pro rata among the other holders of securities, if any, desiring to participate in such registration based on the amount of such securities initially requested to be registered by such holders or as such holders may otherwise agree.

 

(d)            Restrictions on Demand Registrations .  The Company shall not be obligated to effect any Demand Registration within three (3) months after the termination of an offering under a previous Demand Registration or a previous registration under which the Initiating Holder had piggyback rights pursuant to Section 4 hereof where the Initiating Holder was permitted to register and sell 50% of the Registrable Shares requested to be included therein.  The Company may postpone for up to ninety (90) days the filing or the effectiveness of a Registration Statement for a Demand Registration if, based on the good faith judgment of the Company’s board of directors, such filing or effectiveness would be materially detrimental to the Company and its stock holders, such postponement or withdrawal is necessary in order to avoid premature disclosure of a matter the board has determined would not be in the best interest of the Company to be disclosed at such time; and provided , further , that in the event described above, the Initiating Holders requesting such Demand Registration shall be entitled to withdraw such request prior to its effective date and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations.  The Company shall provide written notice to the Initiating Holders requesting such Demand Registration of (i) any postponement or withdrawal of the filing or effectiveness of a Registration Statement pursuant to this Section 2(d) , (ii) the Company’s decision to file or seek effectiveness of such Registration Statement following such withdrawal or postponement and (iii) the effectiveness of such Registration Statement.  The Company may defer the filing of a particular Registration Statement pursuant to this Section 2(d)  only once during any twelve (12) month period.

 

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(e)            Selection of Underwriters .  If any of the Registrable Shares covered by a Demand Registration are to be sold in an underwritten offering, the Initiating Holders shall have the right to select the managing underwriter(s) to administer the offering subject to the approval of the Company, which will not be unreasonably withheld.

 

(f)             Effective Period of Demand Registrations .  After any Demand Registration filed pursuant to this Agreement has become effective, the Company shall use its reasonable best efforts to keep such Demand Registration effective for a period equal to 180 days from the date on which the SEC declares such Demand Registration effective (or if such Demand Registration is not effective during any period within such 180 days, such 180-day period shall be extended by the number of days during such period when such Demand Registration is not effective), or such shorter period which shall terminate when all of the Registrable Shares covered by such Demand Registration have been sold pursuant to such Demand Registration.  If the Company shall withdraw any Demand Registration pursuant to Section 2(d)  (a “ Withdrawn Demand Registration ”), the Initiating Holders of the Registrable Shares remaining unsold and originally covered by such Withdrawn Demand Registration shall be entitled to a replacement Demand Registration which (subject to the provisions of this Section 2 ) the Company shall use its reasonable best efforts to keep effective for a period commencing on the effective date of such Demand Registration and ending on the earlier to occur of the date (i) which is 180 days from the effective date of such Demand Registration and (ii) on which all of the Registrable Shares covered by such Demand Registration have been sold.  Such additional Demand Registration otherwise shall be subject to all of the provisions of this Agreement.

 

3.              Shelf Registration.

 

(a)            (i) At such time as the Company is able to use Form S-3 under the Securities Act (or any successor form) for sales of Registrable Shares by a Holder, at the request of one or more Holders of the lesser of (A) a number Registered Shares equal to at least 50% of the number of Registrable Shares as of the date hereof or (B) Registrable Shares having an aggregate market value of at least $25 million at the time of request, the Company shall use its reasonable best efforts to effect, as expeditiously as possible, the registration under the Securities Act of any number of Registrable Shares for which it receives requests in accordance with Section 2(a)  (the “ Shelf Registration ”).  The Company shall use its reasonable best efforts to cause such Registration Statement to become effective as promptly as practicable and maintain the effectiveness of such Registration Statement (subject to the terms and conditions herein) for a period ending on the earlier of (i) two (2) years following the date on which such Registration Statement first becomes effective (but one (1) year if the Company is not able to use Form S-3 under the Securities Act (or any successor form)), and (ii) the date on which all Registrable Shares covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed or have become freely tradeable pursuant to Rule 144 without regard to volume.

 

(b)            The Shelf Registration Statement pursuant to this Section 3 shall to the extent possible under applicable law, be effected to permit sales on a continuous basis pursuant to Rule 415 under the Securities Act.  Any takedown under the Shelf Registration pursuant to this

 

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Section 3 may or may not be underwritten; provided , however , that (i) Holders may request any underwritten takedown only to be effected as a Demand Registration (in which event, unless such Demand Registration would not require representatives of the Company to meet with prospective purchasers of the Company’s securities, a Demand Registration must be available thereunder and the number of Demand Registrations available shall be reduced by one subject to Section 2(b) ) or (ii) Holders may request an unlimited number of underwritten takedowns to be effected in accordance with the terms of Section 4 .  The Company shall be entitled to effect the Shelf Registration on any available form under the Securities Act.

 

(c)            In the event of a request for a Shelf Registration pursuant to Section 3(a) , the Company shall give written notice of the proposed filing of the Registration Statement in connection therewith to all Holders of Registrable Shares offering to each such Holder the opportunity to have any or all of the Registrable Shares held by such Holder included in such registration statement.  Each Holder of Registrable Shares desiring to have its Registrable Shares registered under this Section 3(c)  shall so advise the Company in writing within fifteen (15) days after the date of such notice from the Company (which request shall set forth the amount of Registrable Shares for which registration is requested), and the Company shall include in such Registration Statement all such Registrable Shares so requested to be included therein.

 

(d)            The number, percentage, fraction or kind of shares referred to in this Section 3 shall be appropriately adjusted for any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution in respect of the shares of Common Stock.

 

(e)            The Company, and any other holder of the Company’s securities who has registration rights, may include its securities in any Shelf Registration effected pursuant to this Section 3 .

 

4.              Piggyback Registrations.

 

(a)            Right to Piggyback .  If at any time commencing 180 days following the closing of a Qualifying IPO the Company proposes to register any of its common equity securities under the Securities Act (other than a registration statement on Form S-8 or on Form S-4 or any similar successor forms thereto or a registration statement covering an offering of convertible securities), whether for its own account or for the account of one or more stockholders of the Company, and the registration form to be used may be used for any registration of Registrable Shares (a “ Piggyback Registration ”), the Company shall give prompt written notice (in any event within twenty (20) days after its receipt of notice of any exercise of other demand registration rights) to each Holders of Registrable Shares having a market value at such time of at least $1 million of its intention to effect such a registration and, subject to Sections 4(b)  and 4(c) , shall include in such registration all Registrable Shares with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the effectiveness of the Company’s notice.  The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.

 

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(b)            Priority on Primary Registrations .  If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without having an adverse effect on such offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Shares requested to be included therein by the Holders, pro rata among the Holders of such Registrable Shares on the basis of the number of shares requested to be registered by such Holders, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.

 

(c)            Priority on Secondary Registrations .  If a Piggyback Registration is an underwritten secondary registration on behalf of a holder of the Company’s securities other than Registrable Shares, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without having an adverse effect on such offering, the Company shall include in such registration (i) first the securities requested to be included therein by the holders requesting such registration and the Registrable Shares requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders, and (ii) second, other securities requested to be included in such registration pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.

 

(d)            Selection of Underwriters .  If any Piggyback Registration is an underwritten primary offering, the Company shall have the right to select the managing underwriter or underwriters to administer any such offering.

 

(e)            Other Registrations .  If the Company has previously filed a Registration Statement with respect to Registrable Shares, and if such previous registration has not been withdrawn or abandoned, the Company shall not be obligated to cause to become effective any other registration of any of its securities under the Securities Act, whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least ninety (90) days has elapsed from the termination of the offering under the previous registration.

 

5.              Holdback Agreements.

 

The Company agrees not to effect any sale or distribution of any of its common equity securities during the ten (10) days prior to and during the 180 days beginning on the pricing date of any underwritten offering pursuant to any Demand Registration or any Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-8 or S-4 or any successor forms thereto) unless the underwriters managing the offering otherwise agree to a shorter period.

 

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6.              Registration Procedures.

 

(a)            Whenever the Holders request that any Registrable Shares be registered pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Shares in accordance with the intended methods of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

 

(i)             prepare and file with the SEC a Registration Statement with respect to such Registrable Shares and use its reasonable best efforts to cause such Registration Statement to become effective as soon as practicable thereafter; and before filing a Registration Statement or Prospectus or any amendments or supplements thereto, furnish to the Holders of Registrable Shares covered by such Registration Statement and the underwriter or underwriters, if any, copies of all such documents proposed to be filed, including documents incorporated by reference in the Prospectus and, if requested by such Holders, the exhibits incorporated by reference, and such Holders shall have the opportunity to object to any information pertaining to such Holders that is contained therein and the Company will make the corrections reasonably requested by such Holders with respect to such information prior to filing any Registration Statement or amendment thereto or any Prospectus or any supplement thereto;

 

(ii)            prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period of not less than 180 days, in the case of a Demand Registration or such shorter period as is necessary to complete the distribution of the securities covered by such Registration Statement and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

 

(iii)           furnish to each seller of Registrable Shares such number of copies of such Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such seller;

 

(iv)           use its reasonable best efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Shares owned by such seller ( provided , however , that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph 6(a)(iv)(B) subject itself to taxation in any such jurisdiction, or (C) consent to general service of process in any such jurisdiction);

 

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(v)            notify each seller of such Registrable Shares, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Shares, such Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;

 

(vi)           in the case of an underwritten offering, enter into such customary agreements (including underwriting agreements in customary form with customary indemnification provisions) and take all such other actions as the Holders of a majority of the Registrable Shares being sold or the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Shares (including, without limitation, making members of Senior Management of the Company available to participate in, and cause them to cooperate with the underwriters in connection with, “road-show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Shares)) and cause to be delivered to the underwriters and the sellers, if any, opinions of counsel to the Company in customary form, covering such matters as are customarily covered by opinions for an underwritten public offering as the underwriters may request and addressed to the underwriters and the sellers;

 

(vii)          make available, for inspection by any seller of Registrable Shares, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such Registration Statement, subject to any confidentiality restrictions which the Company reasonably deems necessary;

 

(viii)         use its reasonable best efforts to cause all such Registrable Shares to be listed on the principal securities exchange on which securities of the same class issued by the Company are then listed;

 

(ix)            if requested, cause to be delivered, immediately prior to the effectiveness of the Registration Statement (and, in the case of an underwritten offering, at the time of delivery of any Registrable Shares sold pursuant thereto), letters from the Company’s independent certified public accountants addressed to each selling Holder (unless such selling Holder does not provide to such accountants the appropriate representation letter required by rules governing the accounting profession) and each underwriter, if any, stating that such accountants are independent public accountants within the meaning of the Securities Act and the applicable rules and regulations adopted by the SEC

 

9

 

thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent certified public accountants delivered in connection with primary or secondary underwritten public offerings, as the case may be;

 

(x)             make generally available to its stockholders a consolidated earnings statement (which need not be audited) for the twelve (12) months beginning after the effective date of a Registration Statement as soon as reasonably practicable after the end of such period, which earnings statement shall satisfy the requirements of an earning statement under Section 11(a) of the Securities Act; and

 

(xi)            promptly notify each seller of Registrable Shares and the underwriter or underwriters, if any:

 

(A)           when the Registration Statement, any pre-effective amendment, the Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective;

 

(B)            of any comments of the SEC or of any written request by the SEC for amendments or supplements to the Registration Statement or Prospectus;

 

(C)            of the notification to the Company by the SEC of its initiation of any proceeding with respect to the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement; and

 

(D)           of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Shares for sale under the applicable securities or blue sky laws of any jurisdiction.

 

(b)            The Company shall ensure that no Registration Statement (including any amendments or supplements thereto and Prospectuses contained therein) shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading (except, with respect to any Holder, for an untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in reliance on and in conformity with written information furnished to the Company by or on behalf of such Holder specifically for use therein).

 

(c)            The Company shall make available to each Holder whose Registrable Shares are included in a Registration Statement (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of each Registration Statement and any amendment thereto, each preliminary Prospectus and Prospectus and each amendment or supplement thereto, each letter written by or on behalf of the Company to the SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), and each item of correspondence from the SEC or the staff of the SEC (or other governmental agency or self-

 

10

 

regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), in each case relating to such Registration Statement (other than any portion thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary Prospectus, and all amendments and supplements thereto and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such Holder.  The Company will promptly notify each Holder by facsimile of the effectiveness of each Registration Statement or any post-effective amendment.  The Company will promptly respond to any and all comments received from the SEC, with a view towards causing each Registration Statement or any amendment thereto to be declared effective by the SEC as soon as practicable and shall file an acceleration request as soon as practicable following the resolution or clearance of all SEC comments or, if applicable, following notification by the SEC that any such Registration Statement or any amendment thereto will not be subject to review.

 

(d)            At all times after the Company has filed a registration statement with the SEC pursuant to the requirements of either the Securities Act or the Exchange Act, the Company shall file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and take such further action as any Holders may reasonably request, all to the extent required to enable such Holders to be eligible to sell Registrable Shares pursuant to Rule 144 (or any similar rule then in effect).

 

(e)            the Company may require each seller of Registrable Shares as to which any registration is being effected to furnish to the Company any other information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

 

(f)             Each seller of Registrable Shares agrees by having its shares treated as Registrable Shares hereunder that, upon notice that the Prospectus included in such Registration Statement (or any document incorporated therein) contains an untrue statement of a material fact or omits any material fact necessary to make the statements therein not misleading or that such Prospectus or Registration Statement  (or any document incorporated therein) must be amended or supplemented for any other reason (a “ Suspension Notice ”), such seller will forthwith discontinue disposition of Registrable Shares for a reasonable length of time not to exceed sixty (60) days until such seller is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by Section 6(a)(v)  hereof, and, if so directed by the Company, such seller will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such seller’s possession, of the Prospectus covering such Registrable Shares current at the time of receipt of such notice; provided , however , that such postponement of sales of Registrable Shares by the Holders shall not exceed ninety (90) days in the aggregate in any one (1) year.  If the Company shall give any notice to suspend the disposition of Registrable Shares pursuant to a Prospectus, the Company shall extend the period of time during which the Company is required to maintain the Registration Statement effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date such seller either is advised by the Company that the use of the Prospectus may be resumed or receives the copies of the supplemented or amended Prospectus contemplated by

 

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Section 6(a)(v) .  In any event, the Company shall not be entitled to deliver more than three (3) Suspension Notices in any one (1) year.

 

7.              Registration Expenses.

 

(a)            All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, listing application fees, printing expenses, transfer agent’s and registrar’s fees, cost of distributing Prospectuses in preliminary and final form as well as any supplements thereto, and fees and disbursements of counsel for the Company and all independent certified public accountants and other Persons retained by the Company (all such expenses being herein called “ Registration Expenses ”) (but not including any underwriting discounts or commissions attributable to the sale of Registrable Shares or fees and expenses of more than one counsel representing the Holders of Registrable Shares), shall be borne by the Company.  In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance which the Company may elect to obtain and the expenses and fees for listing the securities to be registered on each securities exchange on which they are to be listed.

 

(b)            In connection with each registration initiated hereunder (whether a Demand Registration or a Piggyback Registration), the Company shall reimburse the Holders covered by such registration or sale for the reasonable fees and disbursements of one law firm, plus local counsel as necessary, chosen by the Holders of a majority of the Registrable Shares included in such registration or sale.

 

(c)            The obligation of the Company to bear the expenses described in Section 7(a)  and to reimburse the Holders for the expenses described in Section 7(b)  shall apply irrespective of whether a registration, once properly demanded, if applicable, becomes effective, is withdrawn or suspended, is converted to another form of registration and irrespective of when any of the foregoing shall occur; provided , however , that Registration Expenses for any supplements or amendments to a Registration Statement or Prospectus resulting from a misstatement furnished to the Company by a Holder shall be borne by such Holder.  If any Registration Statement for a Demand Registration is withdrawn solely at the request of a Holder of Registrable Shares (unless withdrawn following postponement of filing by the Company in accordance with Sections 2(d)(i) or (ii) ) and such request is the second or subsequent such withdrawal request by any Holder complied with by the Company, then at the election of the requesting Holder, either such Holder shall bear the Registration Expenses for such Registration Statement, or the number of Demand Registrations available to such Holder shall be reduced by one.

 

8.              Best Available Rights Terms.

 

The Company shall not grant to any Person the right, to request the Company to register any common equity securities of the Company except such rights as are not materially more favorable than or inconsistent with the rights granted to the Holders herein. In the event the Company grants rights which are materially more favorable, the Company will make such

 

12

 

provisions available to the Holders and will enter into any amendments necessary to confer such rights on the Holders.

 

9.                                       Distribution of Rights upon Dissolution of the Stockholder.

 

At any time after the execution date of this Agreement, the Stockholder shall cease to exist for any reason as a legal entity (a “ Dissolution ”), if prior to such Dissolution the Stockholder distributed its shares in the Company to its members or if the Stockholder has otherwise distributed such shares to its members, such members shall have the same rights and obligations under this Agreement as granted to the Stockholder as if such Dissolution had not occurred.

 

10.                                Indemnification.

 

(a)            The Company shall indemnify, to the fullest extent permitted by law, each Holder, each underwriter for such Holder, their respective officers, directors and Affiliates and each Person who controls such Holder or underwriter (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation or alleged violation by the Company of the Securities Act, the Exchange Act or applicable “blue sky” laws, except insofar as the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered).

 

(b)            In connection with any Registration Statement in which a Holder of Registrable Shares is participating, each such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, shall indemnify, to the fullest extent permitted by law, the Company, its officers, directors Affiliates, and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such Holder with a sufficient number of copies of the same; provided , however , that the obligation to indemnify shall be several, not joint and several, among such Holders and the liability of each

 

13

 

such Holder shall be in proportion to and limited to the net amount received by such Holder from the sale of Registrable Shares pursuant to such Registration Statement.

 

(c)            Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided , however , that the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under this Section 10 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided , further , that the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to an indemnified party otherwise than under this Section 10 and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.  If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld).  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party there may be one or more legal or equitable defenses available to such indemnified party which are in addition to or may conflict with those available to another indemnified party with respect to such claim.  Failure to give prompt written notice shall not release the indemnifying party from its obligations hereunder.

 

(d)            The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.

 

(e)            If the indemnification provided for in or pursuant to this Section 10 is due in accordance with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified Person as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which result in such losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations.  The relative fault of the indemnifying party on the one hand and of the indemnified Person on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, and by such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  In no event shall the liability of any selling Holder be greater in amount than the amount of net proceeds received by such Holder upon such sale or the amount for which such indemnifying party would have been obligated to pay by way of indemnification if the

 

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indemnification provided for under Section 10(a)  or 10(b)  hereof had been available under the circumstances.

 

11.                                Participation in Underwritten Registrations.

 

No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

12.                                Rule 144.

 

The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request to make available adequate current public information with respect to the Company meeting the current public information requirements of Rule 144(c) under the Securities Act, to the extent required to enable such Holder to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC.  Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such information and requirements.

 

13.                                Miscellaneous.

 

(a)            Notices .  All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by registered or certified mail or by facsimile transmission (with immediate telephone confirmation thereafter),

 

If to the Company:
Baltic Trading Limited
299 Park Avenue, 20th Floor
New York, NY 10171
Attention: John C. Wobensmith, President and Chief Financial Officer
Fax: (646) 443-8551
If to the Stockholder:
Genco Investments LLC
299 Park Avenue, 20th Floor
New York, NY 10171
Attention: John C. Wobensmith, Chief Financial Officer
Fax: (646) 443-8551

 

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or if to another Holder, to the addresses set forth on the counterpart signature pages of this Agreement signed by such Holders.

 

If to a transferee Holder, to the address of such Holder set forth in the transfer documentation provided to the Company or at such other address as such party each may specify by written notice to the others, and each such notice, request, consent and other communication shall for all purposes of the Agreement be treated as being effective or having been given when delivered personally or upon receipt of facsimile confirmation if transmitted by facsimile, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and postage prepaid as aforesaid.

 

(b)            No Waivers .  No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

(c)            Successors and Assigns .  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, it being understood that subsequent Holders of the Registrable Shares are intended third party beneficiaries of this Agreement.

 

(d)            Other Registration Rights .  Other Registration Rights. The Company shall not grant to any Person the right, to request the Company to register any securities of the Company except such rights as are not more favorable than or inconsistent with the rights granted to the Holders herein. In the event the Company grants rights which are more favorable, the Company will make such provisions available to the Holders and will enter into any amendments necessary to confer such rights on the Holders.

 

(e)            Governing Law .  The laws of the State of New York shall govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties, without regard to the principles of conflicts of laws thereof.

 

(f)             Jurisdiction .  Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in any federal or state court located in the County and State of New York, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without

 

16

 

limiting the foregoing, each party agrees that service of process on such party as provided in this Section 13(e)  shall be deemed effective service of process on such party.

 

(g)            Waiver of Jury Trial .  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(h)            Counterparts; Effectiveness .  This Agreement may be executed in any number of counterparts (including by facsimile) and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document.  All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.  This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

 

(i)             Entire Agreement .  This Agreement contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes and replaces all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof.

 

(j)             Captions .  The headings and other captions in this Agreement are for convenience and reference only and shall not be used in interpreting, construing or enforcing any provision of this Agreement.

 

(k)            Severability .  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

(l)             Amendments .  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the prior written consent of the holders of a majority of the Registrable Shares (as constituted on the date hereof); provided , however , that without a Holder’s written consent no such amendment, modification, supplement or waiver shall affect adversely such Holder’s rights hereunder in a discriminatory manner inconsistent with its adverse effects on rights of other Holders hereunder (other than as reflected by the different number of shares held by such Holder); provided , further , that the consent or agreement of the Company shall be required with regard to any termination, amendment, modification or supplement of, or waivers or consents to departures from, the terms hereof, which affect the Company’s obligations hereunder.  This Agreement cannot be changed, modified, discharged or terminated by oral agreement.

 

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(m)           Aggregation of Shares .  All Registrable Shares held by or acquired by any Affiliated Persons will be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

(n)            Equitable Relief .  Without limiting the remedies available, the parties hereto acknowledge that any failure by the Company to comply with its obligations under this Agreement will result in material irreparable injury to the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, any Holder shall have the right to obtain such relief as may be required to specifically enforce the Company’s obligations under this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by each of the parties hereto as of the date first written above.

 

 

	BALTIC TRADING LIMITED
	By:	/s/ John C. Wobensmith
	Name:	John C. Wobensmith
	Title:	President and Chief Financial Officer
	GENCO INVESTMENTS LLC
	By:	/s/ John C. Wobensmith
	Name:	John C. Wobensmith
	Title:	Chief Financial Officer