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Exhibit 10.9
ASSET PURCHASE AGREEMENT
February 20, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, L.L.C.
(Buyer)
OAK MOUNTAIN ENERGY CORPORATION
▇▇▇▇▇ RESOURCES, INC.
KODIAK COAL, INC.
CAHABA COAL ENGINEERING AND LAND SURVEYING, INC.
COAL HANDLING AND PROCESSING, INC.
MOUNTAINEER MANAGEMENT, INC.
(Sellers)
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
(Shareholders)
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND CONVENTIONS
1.01 Defined Terms................................................ 2
1.02 Conventions.................................................. 4
ARTICLE II
SALE AND TRANSFER OF ASSETS; CLOSING
2.01 Assets to be Acquired........................................ 4
2.02 Excluded Assets.............................................. 6
2.03 Purchase Price............................................... 6
2.04 Allocation of Purchase Price................................. 7
2.05 Assumed and Retained Liabilities............................. 7
2.06 Closing...................................................... 8
2.07 Deliveries at the Closing.................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDERS
3.01 Organization and Good Standing............................... 12
3.02 Authorization................................................ 12
3.03 No Violation................................................. 12
3.04 Capitalization; Ownership; Directors and Officers............ 13
3.05 No Subsidiaries.............................................. 13
3.06 No Options................................................... 13
3.07 Financial Statements......................................... 14
3.08 No Undisclosed Liabilities................................... 14
3.09 Absence of Changes........................................... 15
3.10 Condition and Sufficiency of Acquired Assets................. 16
3.11 Accounts Receivable; Bank Accounts........................... 16
3.12 Title to Acquired Assets; Liens.............................. 16
3.13 Contracts.................................................... 18
3.14 Permits and Licenses......................................... 19
3.15 Intangible and Intellectual Property......................... 20
3.16 Tax Matters.................................................. 20
3.17 Litigation................................................... 21
3.18 Insurance.................................................... 22
3.19 Environmental Matters........................................ 23
3.20 Employee Matters............................................. 26
3.21 Labor Matters................................................ 27
3.22 Workers' Compensation; Black Lung............................ 28
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3.23 Compliance with Law.......................................... 28
3.24 Related Parties; Conflicts of Interest....................... 29
3.25 Mining and Geological Information............................ 29
3.26 Reclamation.................................................. 29
3.27 Brokers or Finders........................................... 30
3.28 Disclosure................................................... 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.01 Corporate Organization and Standing.......................... 30
4.02 Authorization................................................ 30
4.03 No Violation................................................. 31
4.04 Disclosure................................................... 31
4.05 Brokers and Finders.......................................... 31
4.06 Litigation................................................... 31
4.07 Financial Statements......................................... 31
ARTICLE V
COVENANTS BEFORE CLOSING
5.01 Covenants of the Sellers and the Shareholders Before the
Closing...................................................... 32
5.02 Covenants of the Buyer Before the Closing.................... 36
ARTICLE VI
OTHER COVENANTS
6.01 Property Taxes............................................... 37
6.02 Removal of Excluded Assets................................... 37
6.03 Existing Citations........................................... 37
6.04 Remedial Action.............................................. 37
6.05 Transfer of Permits.......................................... 38
6.06 Assigned Contracts........................................... 38
6.07 Accounts Receivable.......................................... 39
6.08 Sellers' Employees........................................... 39
6.09 Specific Performance......................................... 39
6.10 Expenses..................................................... 40
6.11 Public Announcements......................................... 41
6.12 Confidentiality; Return and Retention of Documents........... 41
6.13 Further Assurances........................................... 41
6.14 Covenant Not to Compete...................................... 41
6.15 Delivery of Promissory Notes................................. 42
6.16 Change of Name; Liquidation.................................. 42
6.17 Buyer's Financial Statements................................. 42
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ARTICLE VII
CONDITIONS PRECEDENT TO THE
SELLERS' AND THE SHAREHOLDERS' PERFORMANCE
7.01 Performance of Agreements.................................... 43
7.02 Accuracy of Representations and Warranties................... 43
7.03 Absence of Litigation and Proceedings........................ 43
7.04 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act........................................ 43
7.05 Authority.................................................... 43
7.06 Deliveries................................................... 43
7.07 Additional Documents......................................... 43
7.08 Release of Liability......................................... 44
7.09 Documents Delivered.......................................... 44
7.10 Employment Agreements........................................ 44
ARTICLE VIII
CONDITIONS PRECEDENT TO THE BUYER'S PERFORMANCE
8.01 Performance of Agreements.................................... 44
8.02 Accuracy of Representations and Warranties................... 45
8.03 Permits...................................................... 45
8.04 Absence of Litigation and Proceedings........................ 45
8.05 Documents Delivered.......................................... 45
8.06 Material Adverse Changes..................................... 45
8.07 Authority.................................................... 45
8.08 No Prohibition............................................... 46
8.09 Due Diligence................................................ 46
8.10 Financing.................................................... 46
8.11 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act........................................ 46
8.12 Title Matters................................................ 46
8.13 Deliveries................................................... 47
8.14 Additional Documents......................................... 47
8.15 Employment Agreements........................................ 47
8.16 Title Due Diligence.......................................... 47
ARTICLE IX
TERMINATION
9.01 Termination Events........................................... 47
9.02 Effect of Termination........................................ 48
ARTICLE X
SURVIVAL; INDEMNIFICATION; REMEDIES
10.01 Survival..................................................... 49
10.02 Indemnification and Reimbursement by the Sellers............. 49
10.03 Indemnification and Reimbursement by the Buyer............... 49
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10.04 Limitations.................................................. 50
10.05 Procedure for Indemnification C Third-Party Claims........... 52
10.06 Procedure for Indemnification C Other Claims................. 54
ARTICLE XI
GENERAL PROVISIONS
11.01 Entire Agreement; Amendment.................................. 54
11.02 Binding Effect and Benefit................................... 54
11.03 Assignment................................................... 54
11.04 Waiver....................................................... 54
11.05 Severability................................................. 55
11.06 Third Parties................................................ 55
11.07 Governing Law................................................ 55
11.08 Jurisdiction; Service of Process............................. 55
11.09 Notices...................................................... 55
11.10 Time of Essence.............................................. 56
11.11 Headings..................................................... 56
11.12 Counterparts................................................. 57
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INDEX OF SCHEDULES
Schedule
Section
Reference Description
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1.01 Permitted Liens
2.01(a) The Owned Real Property
2.01(b) The Real Property Leases
2.01(c) The Real Property Contracts
2.01(d) The Tangible Personal Property
2.01(e) The Other Contracts
2.01(f) Inventories of Coal and Other Products or Goods
2.01(g) Accounts Receivable as of January 31, 1997
2.01(j) Intangible and Intellectual Property
2.01(k) Claims Relating to the Acquired Assets
2.01(m) Sellers' Bank Accounts
2.02 The Excluded Assets
2.03(d) Purchase Price Adjustment
2.04 Allocation of Purchase Price
2.05(a) The Assumed and Retained Liabilities
3.01 Dates of Incorporation for the Sellers
3.03 Consents and Approvals
3.04 Ownership and Management of Sellers
3.05 Sellers' Ownership and Interests in Other Entities
3.06 Obligations as to Sellers' Stock
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Schedule
Section
Reference Description
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3.07(A) Audited Financial Statements of the Sellers
3.07(B) The Sellers' Company Prepared Financial Statements as at December
31, 1996
3.07(C) Exceptions as to Preparation of Financial Statements
3.09 Material Changes
3.09(c) Increases in Compensation
3.12(a)(i) Exceptions as to Title to the Acquired Assets
3.12(a)(ii) Map of the Real Property and Real Property Interests
3.12(c)(i) Exceptions to the Real Property Leases and Real Property
Contracts
3.12(c)(ii) Defaults under the Real Property Leases and the Real
Property Contracts
3.12(d) Adverse Claims
3.12(e) Lease Defaults and Forfeitures
3.12(f) Additional Ancillary Rights
3.13 Defaults under Other Contracts
3.14(a) The Mining Permits
3.14(b) The Other Permits
3.14(c) Exceptions to the Required Permits
3.16 Pending Tax Proceedings
3.17(a) Litigation and Proceedings
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Schedule
Section
Reference Description
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3.17(b) Notice of Proceedings
3.18(a) Insurance Policies and Bonds
3.18(b) Exceptions as to Insurance Matters
3.19(a) Exceptions as to Environmental Matters
3.19(b) Information on Hazardous Materials
3.20(a) Employee Benefit Programs
3.20(e) Employee Benefit Programs-Adverse Proceedings
3.20(f) Employment Contracts
3.23 Exceptions as to Compliance with Law
3.24 Related Parties and Conflicts of Interest
3.26 Exceptions as to Reclamation, Environmental and Related Work
4.03 Exceptions as to No Violations
4.07 Balance Sheet of Buyer
5.01(h)(iii) Estoppel Certificates to be Obtained
7.08 Releases for Sellers and Shareholders
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INDEX OF EXHIBITS
Schedule
Section
Reference Description
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2.03(b) The Note
2.03(c) The Royalty Agreement
2.07(a)(i) Form of General Warranty Deed
2.07(a)(ii) Form of Bills of Sale
2.07(a)(iii) Form of Assignments for Leased Real Property
2.07(a)(iv) Form of Assignments for the Real Property Contracts, the Other
Contracts, the Permits and the Accounts Receivable
2.07(a)(ix) Form of Opinion-Counsel for Sellers
2.07(a)(xiii) The ▇▇▇▇ Employment Agreement
2.07(b)(v) Form of Opinion-Counsel for Buyer
6.15(A)&(B) Form of Promissory Notes for Shareholders
7.10(A) Form of Employment Agreement for ▇▇▇▇▇▇ ▇▇▇▇
7.10(B) Form of Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made and entered into
this 20th day of February, by and among OAK MOUNTAIN ENERGY, L.L.C., an Alabama
limited liability company (the "Buyer"); and OAK MOUNTAIN ENERGY CORPORATION, an
Alabama corporation ("Oak Mountain Energy"), ▇▇▇▇▇ RESOURCES, INC., an Alabama
corporation ("▇▇▇▇▇"), KODIAK COAL, INC., an Alabama corporation ("Kodiak"),
CAHABA COAL ENGINEERING AND LAND SURVEYING, INC., an Alabama corporation
("Cahaba"), COAL HANDLING AND PROCESSING, INC., an Alabama corporation ("Coal
Handling"), and MOUNTAINEER MANAGEMENT, INC., an Alabama corporation
("Mountaineer") (Oak Mountain Energy, ▇▇▇▇▇, Kodiak, Cahaba, Coal Handling and
Mountaineer are hereinafter referred to as the "Sellers"); and ▇▇▇▇▇▇ ▇. ▇▇▇▇,
an individual residing in Shelby County, Alabama ("▇▇▇▇"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇., an individual residing in ▇▇▇▇▇▇▇ County, Florida ("▇▇▇▇▇▇▇▇▇") (▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ are hereinafter referred to as the "Shareholders").
WHEREAS, the Shareholders together own all of the issued and outstanding
shares of stock of Oak Mountain Energy, ▇▇▇▇▇, Cahaba and Coal Handling and own
a majority of the issued and outstanding shares of stock of Kodiak and
Mountaineer; and
WHEREAS, the Sellers are actively engaged as an integrated group in the
business of mining, processing, marketing, selling and distributing coal and
related activities in Shelby and ▇▇▇▇ Counties, Alabama; and
WHEREAS, the Shareholders and the Sellers desire to sell all or
substantially all of the assets of each of the Sellers to the Buyer; and
WHEREAS, following the closing of the transactions contemplated herein,
the Shareholders intend to (i) dissolve and liquidate each of the Sellers (other
than Oak Mountain Energy), (ii) cause the proceeds from the sale of assets
hereunder to be distributed to the shareholders of the Sellers (other than Oak
Mountain Energy), and (iii) cause Oak Mountain Energy to redeem its shares of
stock owned by ▇▇▇▇▇▇▇▇▇, after which Oak Mountain Energy will be wholly-owned
by ▇▇▇▇ and will not engage in any active business; and
WHEREAS, because of the substantial benefits to be received by the
Shareholders as a result of the transactions contemplated hereunder, including
the planned liquidations and redemption, and as an inducement to the Buyer to
acquire all or substantially all of the assets of the Sellers as contemplated
herein, the Shareholders have agreed to execute, deliver and perform this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements, covenants, representations, warranties and indemnities herein
contained, and other good and valuable
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consideration, the receipt and sufficiency of which are hereby acknowledged, the
Buyer, the Sellers and the Shareholders agree as follows:
ARTICLE I
DEFINITIONS AND CONVENTIONS
1.01 Defined Terms. In addition to the terms defined throughout this
Agreement, the following capitalized terms as used in this Agreement shall have
the meanings given to them in this Section 1.01:
"Acquired Assets" shall have the meaning set forth in Section 2.01.
"Actual Knowledge" means present or prior knowledge of a fact or
other matter.
"Actual Knowledge of the Sellers" means the Actual Knowledge of
Ryan, Stranahan, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇.
▇▇▇▇▇▇.
"Affiliate" means, with respect to any natural person, corporation,
partnership, limited liability company or other entity, a natural person or
entity that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such person or
entity.
"Assets" means all of the Sellers' properties and assets, real,
personal, or mixed, tangible and intangible, of every kind, nature and
description, wherever located, including the Acquired Assets and the Excluded
Assets.
"Business" means the use and operation of the Assets by the Sellers.
"Closing" means the consummation of the transactions contemplated in
this Agreement, including the sale and transfer of the Acquired Assets and the
delivery of the Purchase Price.
"Closing Date" means the date on which the Closing takes place.
"Contract" means any agreement, obligation, promise, commitment,
understanding or other arrangement (whether written or oral and whether express
or implied) that is legally binding.
"Excluded Assets" shall have the meaning set forth in Section 2.02.
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"Governmental Authority" means any federal, state, local or
municipal government, governmental or quasi-governmental authority, agency or
body exercising, or purporting to exercise, any administrative, executive,
judicial, investigative, legislative, policy, regulatory, taxing or other power
or authority of any nature.
"Knowledge" means (i) Actual Knowledge or (ii) knowledge of a fact
or other matter that should have been known by the party if the party had acted
in a manner reasonable for a person in his or her position.
"Knowledge of the Buyer" means the Knowledge of ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Knowledge of the Sellers" means the Knowledge of Ryan, Stranahan,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Legal Requirement" means any federal, state, local or municipal
constitution, law, ordinance, regulation, rule or statute (including any of the
foregoing which have been enacted or adopted but are not yet effective).
"Lien" means any pledge, security interest, lien, mortgage, deed of
trust, hypothecation, charge, restriction, reservation, right, claim or other
encumbrance, whether consensual, statutory or otherwise, of any kind, nature or
description whatsoever other than Permitted Liens.
"Material Adverse Effect" means anything which directly or
indirectly generates, precipitates, initiates, causes, gives rise to or results
in any liability, obligation, settlement, loss, damage, expense or diminution in
value in excess of $25,000.
"Order" means any order, agreed order, injunction, judgment, decree,
ruling, assessment, arbitration award or arbitration decision.
"Permitted Liens" means materialmen's and similar statutory liens
arising in the ordinary course of business, purchase money security interests
arising in the ordinary course of business, and the other liens identified on
Schedule 1.01.
"Proceeding" means action, arbitration, hearing, investigation,
litigation or suit (whether civil, criminal, administrative or investigative,
formal or informal).
"Purchase Price" shall have the meaning set forth in Section 2.03.
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1.02 Conventions.
Unless otherwise indicated:
(a) The word "including" followed by a listing does not limit the
preceding words or terms and shall mean "including, without limitation."
(b) The word "Sellers", and any pronoun used to refer thereto, shall
mean all of the Sellers, any combination of the Sellers, and each Seller
individually.
(c) The word "Shareholders", and any pronoun used to refer thereto,
shall mean both of the Shareholders and each Shareholder individually.
(d) The phrase "the Sellers and the Shareholders" shall mean all of
the Sellers and the Shareholders, any combination of the Sellers and the
Shareholders, each Seller individually and each Shareholder individually.
ARTICLE II
SALE AND TRANSFER OF ASSETS; CLOSING
2.01 Assets to be Acquired. Subject to and upon the terms, conditions,
representations, warranties, covenants and indemnities made herein, at the
Closing, the Sellers shall sell, grant, convey, assign, transfer and deliver to
the Buyer, and the Buyer shall purchase, acquire and accept from the Sellers,
all of the Sellers' right, title and interest in and to all of their properties
and assets, real, personal, or mixed, tangible and intangible, of every kind,
nature and description, wherever located, belonging to the Sellers on the
Closing Date, other than the Excluded Assets (all of which are hereinafter
collectively referred to as the "Acquired Assets"), including the following:
(a) all right, title and interest in and to any real property,
including coal, oil, gas and other minerals, if any, owned by the Sellers and
identified on Schedule 2.01(a), together with all improvements thereon and
appurtenances thereunto belonging (the "Owned Real Property");
(b) all of the Sellers' interests in and rights to real property,
including coal, oil, gas and other minerals, if any, in and under the leases and
subleases, including all amendments, modifications, extensions and renewals
thereof (the "Real Property Leases") identified on Schedule 2.01(b) (the real
property, including coal, oil, gas and other mineral, if any, subject to the
Real Property Leases is hereinafter referred to as the "Leased Real Property");
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(c) all of the Sellers' interests in and rights to and under all
Contracts incident to the Owned Real Property or the Leased Real Property
(including rights-of-way, easements, reversionary rights and licenses related
thereto) identified on Schedule 2.01(c) (the "Real Property Contracts");
(d) all of the buildings, structures, mine structures, improvements,
fixtures, trade fixtures, plants, preparation plants, facilities, coal loading
and handling facilities, equipment, mining equipment, vehicles, machinery,
furniture, supplies, materials, tools, spare parts, laboratory equipment,
computer hardware, and other tangible property of the Sellers, whether owned or
leased by the Sellers, identified on Schedule 2.01(d) (the "Tangible Personal
Property");
(e) all of the Sellers' interest in and rights to and under all
Contracts (other than the Real Property Contracts and the Real Property Leases)
identified on Schedule 2.01(e) (the "Other Contracts") and, if requested by the
Buyer at least ten days prior to the Closing, to the extent assignable, any or
all of the insurance policies identified as items 2, 5 and 6 on Schedule
3.20(a);
(f) all inventories of coal (in stockpiles or otherwise) and other
products or goods held for sale by the Sellers, wherever located (the
"Inventories") (Schedule 2.01(f) identifies all Inventories as of January 31,
1997);
(g) all accounts receivable and other rights to receive payments
from customers of the Sellers, and the full benefit of all security for such
accounts receivable (the "Accounts Receivables"), as of the Closing Date
(Schedule 2.01(g) identifies all Accounts Receivable as of January 31, 1997);
(h) to the extent transferrable to the Buyer, all permits, licenses,
bonds, orders, approvals and other authorizations of any Governmental Authority
owned, held or used by the Sellers in connection with the Acquired Assets or the
Business, and all pending applications therefor and pending renewals thereof;
(i) all operating, mining and reserve data and records of the
Sellers, wherever located, and whether or not kept in tangible, electronic or
other format, including all engineering, reserve, geological, mining, core hole,
lithologic, washability, feasibility and similar data, surveys, maps, drawings,
measurements, reports, plans, analyses, customer lists and records, research and
development reports and records, production reports and records, equipment logs,
operating guides and manuals, copies of financial and accounting records,
correspondence and other similar documents and records;
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(j) all of the intangible and intellectual property of the Sellers,
including all software, products, trade secrets, know-how processes, methods,
plans, research data, marketing plans and strategies, forecasts, trademarks,
service marks, trade names, patents and patent rights, logos and copyrights
identified on Schedule 2.01(j);
(k) all claims of the Sellers against third parties relating to the
Acquired Assets, whether ▇▇▇▇▇▇ or inchoate, known or unknown, contingent or
otherwise, identified on Schedule 2.01(k);
(l) all insurance claims (including applicable deductibles,
copayments or self-insured requirements) arising in connection with damage to
the Acquired Assets occurring prior to the Closing Date, to the extent not
expended for the repair or restoration of the Acquired Assets;
(m) all cash and cash equivalents of the Sellers, and all of the
bank accounts used by the Sellers for the Business identified on Schedule
2.01(m); and
(n) the going concern value and goodwill of the Sellers and the
Business.
2.02 Excluded Assets. Notwithstanding anything contained in Section 2.01
or elsewhere in this Agreement, the properties, assets and items identified on
Schedule 2.02 (collectively, the "Excluded Assets") are not part of the sale and
purchase contemplated hereunder, are excluded from the Acquired Assets to be
transferred to the Buyer hereunder, and shall remain the property of the Sellers
after the Closing. The Excluded Assets shall also include any other assets which
Buyer designates as Excluded Assets in writing to the Sellers and the
Shareholders at least five (5) days prior to the Closing. The Purchase Price
shall not be changed by the Buyer's designation of additional Excluded Assets.
2.03 Purchase Price. The total purchase price (the "Purchase Price") for
the Acquired Assets shall be:
(a) $13,000,000 in cash;
(b) $3,500,000 payable pursuant to a promissory note or notes
substantially similar in form to that attached hereto as Exhibit 2.03(b) (the
"Note");
(c) a royalty agreement between the Buyer and Oak Mountain Energy
substantially similar in form to that attached hereto as Exhibit 2.03(c) (the
"Royalty Agreement");
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(d) such sums determined and payable solely in accordance with
Schedule 2.03(d); and
(e) such sums, up to a maximum of $1,650,000, to allow the Sellers
(i) to pay all wages, salaries, bonuses, accrued vacation, vehicle lease
payments, bereavement pay, jury duty pay, sick leave pay, severance pay and
accrued holiday pay (including related payroll and withholding taxes) owing to
the Sellers' employees on the Closing Date and (ii) to make all payments on
behalf of the Sellers' employees to any pension, retirement, profit-sharing
plan, thrift-savings plan, or deferred compensation plan, if any.
2.04 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Sellers, and among the Acquired Assets and the covenant not to compete
set forth in Section 6.14, in accordance with the allocation set forth on
Schedule 2.04. After the Closing, the parties agree to make consistent use of
the allocation specified in Schedule 2.04 in any and all filings, declarations
and reports with the Internal Revenue Service in respect thereof, including the
reports required to be filed under Section 1060 of the Internal Revenue Code of
1986, as amended, if applicable, it being understood that the Buyer shall
prepare and deliver IRS Form 8594 to the Sellers within forty-five (45) days
after the Closing Date. The Sellers and the Shareholders agree to cooperate with
and assist the Buyer in finalizing and filing said Form.
2.05 Assumed and Retained Liabilities.
(a) From and after the Closing, subject to and based upon the
representations, warranties, covenants and indemnities contained herein and in
any agreement, instrument or document delivered hereunder, the Buyer shall
assume the liabilities and obligations identified on Schedule 2.05(a) (the
"Assumed Liabilities"). The Sellers and the Shareholders acknowledge and agree
that the assumption of liabilities by the Buyer under this Section 2.05(a) shall
not limit, restrict, impair or otherwise affect the right of the Buyer to rely
on the representations, warranties and covenants of the Sellers and the
Shareholders made in this Agreement and any agreement, instrument or document
delivered pursuant hereto or the right of the Buyer to seek indemnification from
the Sellers and the Shareholders in accordance with the provisions of Article X
of this Agreement. For example, if the Buyer pursuant to this Section 2.05(a)
assumes the liabilities related to "A," and there is a breach of a
representation, warranty or covenant of the Sellers and the Shareholders with
respect to "A," the Buyer shall be entitled to seek indemnification under
Article X of this Agreement notwithstanding the Buyer's assumption of the
liabilities related to "A."
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(b) Except for the liabilities and obligations specifically assumed
by the Buyer in accordance with Section 2.05(a), the Buyer does not assume or
agree to be responsible for, and shall not be deemed to assume or be responsible
for, any liability or obligation of the Sellers and the Shareholders of any
kind, nature or description, whether such liabilities or obligations relate to
payment, performance or otherwise, are matured or unmatured, known or unknown,
contingent or otherwise, fixed or absolute, present, future or otherwise,
including: (i) any liability or obligation arising from or relating to any of
the Excluded Assets; (ii) any liability or obligation relating to federal, state
or local income taxes of the Sellers and the Shareholders; (iii) the Prudential
Retirement Accumulation 401(k) Plan in the name of ▇▇▇▇▇ Resources, Inc. and
also executed by Oak Mountain Energy Corporation; (iv) the legal proceeding
known as ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ v. ▇▇▇▇ Energy Mines, Inc., et al., (including ▇▇▇▇▇
Resources, Inc.), Employers, Claim No. 94-66086, pending before the West
Virginia Working Compensation Office of Judges; (v) any liability to ▇▇▇▇
Energy, Inc. or ▇▇▇▇▇ Equipment Company, Inc., or their shareholders, directors,
officers, affiliates, successors or assigns, relating to (A) pond fines which
may never be mined or removed and (B) acts or omissions of the Sellers related
to the failure to mine or remove coal in connection with the contracts
identified as items 4 and 5 on Schedule 2.01(e) prior to the Closing Date
(provided, however, that the Buyer agrees to pay the legal fees of ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. incurred by the Sellers in connection with defending Sellers in any
proceeding relating to (A) or (B) above, up to a maximum total amount of
$50,000); and (vi) any payments to be made to the employees of the Sellers
pursuant to Section 6.08 hereof; and (vii) any liability or obligation of the
Sellers or relating to the Business which arises prior to the Closing Date or
which arises after the Closing Date as a result of facts or circumstances
occurring or existing prior to the Closing Date (collectively, the "Retained
Liabilities"); it being expressly acknowledged, understood and agreed that any
and all of the Retained Liabilities shall remain the sole responsibility of and
shall be retained, paid, performed and discharged by the Sellers and the
Shareholders.
2.06 Closing.
(a) The Closing shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇
Rose & White LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ or before
April 2, 1997, as may be extended by Buyer pursuant to Section 9.01(e), or at
such other time and place as the parties shall mutually agree.
2.07 Deliveries at the Closing.
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(a) At the Closing, the Sellers and the Shareholders shall deliver,
or shall cause to be delivered, to the Buyer the following:
(i) one or more deeds, containing covenants of general warranty,
substantially similar in form to that attached hereto as Exhibit 2.07(a)(i),
duly executed and acknowledged by the Sellers, as appropriate, pursuant to which
the Sellers shall transfer and convey title to the Owned Real Property to the
Buyer, free and clear of any Lien;
(ii) one or more bills of sale substantially similar in form and
substance to that attached hereto as Exhibit 2.07(a)(ii), duly executed by the
Sellers, as appropriate, pursuant to which the Sellers shall transfer and convey
title to all of the Tangible Personal Property and the Inventories to the Buyer,
free and clear of any Lien;
(iii) one or more assignments substantially similar in form and
substance to that attached hereto as Exhibit 2.07(a)(iii), duly executed and
acknowledged by the Sellers, as appropriate, pursuant to which the Sellers shall
assign and transfer the Real Property Leases and the rights of the Sellers
thereunder to Buyer, free and clear of any Lien;
(iv) one or more assignments substantially similar in form and
substance to that attached hereto as Exhibit 2.07(a)(iv), duly executed by the
Sellers, as appropriate, pursuant to which the Sellers shall assign and transfer
the Real Property Contracts, the Other Contracts, the Required Permits (as
defined in Section 3.14(b) hereof, to the extent transferable) and the Accounts
Receivable to Buyer, free and clear of any Lien;
(v) certificates of title to all motor vehicles included in the
Acquired Assets, in such form as is necessary in the State of Alabama to
transfer title to such vehicles to the Buyer, duly executed by one or more of
the Sellers, as appropriate, and properly acknowledged, if necessary;
(vi) all other instruments and documents that the Buyer
reasonably deems necessary or advisable to transfer good and marketable title to
the Acquired Assets, free and clear of any Lien, to the Buyer, in such form and
substance as the Buyer may reasonably require;
(vii) originals of all consents and approvals referred to in
Section 3.03 and Schedule 3.03;
(viii) originals of all estoppel certificates obtained pursuant
to Section 5.01(h)(iii), duly executed by the appropriate parties;
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(ix) an opinion of ▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Sellers and
the Shareholders, in the form attached hereto as Exhibit 2.07(a)(ix);
(x) originals of all Real Property Leases identified in
Schedule 2.01(b);
(xi) originals of all the Real Property Contracts, the Other
Contracts and the Required Permits;
(xii) an original of the Royalty Agreement, duly executed by
Oak Mountain Energy;
(xiii) an original of an employment agreement between the
Buyer and ▇▇▇▇ substantially similar in form and substance to that attached
hereto as Exhibit 2.07(a)(xiii), duly executed by ▇▇▇▇ (the "▇▇▇▇ Employment
Agreement");
(xiv) original letters, executed by the Sellers, to all
account debtors relative to the accounts receivable transferred to the Buyer
hereunder, directing such account debtors to make all future payments to the
Buyer;
(xv) certificates executed by the Shareholders and the Sellers
certifying:
(A) that each of the representations and warranties
of the Sellers and the Shareholders contained in this Agreement was accurate in
all respects as of the date of this Agreement and is accurate in all respects as
of the Closing Date, as if made on the Closing Date; and
(B) that the Sellers and the Shareholders have performed
in all material respects their obligations and covenants under this
Agreement;
(xvi) a certificate of the Secretary of each Seller certifying
the adoption of resolutions by the stockholders and board of directors of each
Seller authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein;
(xvii) a FIRPTA affidavit evidencing that the grantors and
assignors of the real property interests are non-foreign persons within the
meaning of the Foreign Investment in Real Property Tax Act;
(xviii) the title insurance company's standard form of
owner's/seller's affidavit;
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(xix) updated Schedules 2.01(f) and 2.01(g) identifying the
Inventories and Accounts Receivable of the Sellers as of the Closing Date,
together with a certificate signed by the Sellers and the Shareholders
certifying that said updated Schedules contain a true, correct and complete list
of the Inventories and Accounts Receivable of the Sellers as of the Closing
Date; and
(xx) a certificate executed by the Sellers estimating the
amount necessary to allow the Sellers (A) to pay all wages, salaries, bonuses,
accrued vacation, vehicle lease payments, bereavement pay, jury duty pay, sick
leave pay, severance pay and accrued holiday pay (including related payroll and
withholding taxes) owing to the Sellers' employees on the Closing Date and (B)
to make all payments on behalf of the Sellers' employees to any pension,
retirement, profit-sharing plan, thrift-savings plan, or deferred compensation
plan, if any.
(b) At the Closing, the Buyer shall deliver to the Sellers and the
Shareholders, as appropriate, the following:
(i) $13,000,000 in readily available funds by wire transfer to
the Sellers in accordance with Schedule 2.04;
(ii) the Note;
(iii) an original of the Royalty Agreement, duly executed by
the Buyer;
(iv) an original of the ▇▇▇▇ Employment Agreement, duly
executed by the Buyer;
(v) the opinion of counsel to the Buyer in the form attached
hereto as Exhibit 2.07(b)(v);
(vi) a certificate executed by the Buyer certifying:
(A) that each of the Buyer's representations and
warranties in this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date, as if made on
the Closing Date; and
(B) that the Buyer has performed in all material
respects its obligations and covenants under this Agreement;
(vii) a certificate of a manager of the Buyer certifying the
adoption of resolutions by the members and managers of the Buyer authorizing the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein;
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(viii) a reducing letter of credit in the original face amount
of $1,923,750 in favor of The Trust Company of Toledo, N. A. to secure the
principal payments due and owing on December 1, 1997, and December 1, 1998,
under that certain Amended and Restated Promissory Note in the form attached
hereto as Exhibit 6.15(B); and
(ix) evidence reasonably satisfactory to the Sellers and the
Shareholders that all contributions to the capital of the Buyer required to be
made by Shelby Energy Group, L.L.C., a Delaware limited liability company, have
been made, and releases for all collateral securing that certain Third Amended
and Restated Negotiable Promissory Note dated January 21, 1997, from Oak
Mountain Energy to Zither Mining Company, Inc. in the maximum principal amount
of $8,000,000, as the same may be hereafter amended.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDERS
The Sellers and the Shareholders hereby jointly and severally represent
and warrant to the Buyer as follows:
3.01 Organization and Good Standing. Each of the Sellers is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Alabama. Each of the Sellers has the requisite power and authority to
carry on its business as it is now being and contemplated to be conducted and to
own and operate its properties and assets. Each of the Sellers is duly qualified
to do business as a foreign corporation in, and is in good standing under the
laws of, each state or other jurisdiction in which the ownership or use of its
properties or assets, or the nature of its activities, requires such
qualification. Each of the Sellers has delivered to the Buyer true, correct and
complete copies of its articles of incorporation and bylaws, as amended and in
effect as of the date hereof. Schedule 3.01 contains a true and correct list of
the dates of incorporation for each of the Sellers.
3.02 Authorization. The Sellers have the requisite power and authority to
execute, deliver and perform this Agreement and the agreements and documents
referred to herein, and to consummate the transactions contemplated herein and
therein. The board of directors and the stockholders of the Sellers have taken
all action required by law, the Sellers' articles of incorporation and bylaws or
otherwise to authorize the execution, delivery and performance of this Agreement
and the agreements and documents referred to herein, and to consummate the
transactions contemplated herein and therein. This Agreement and the documents
and agreements referred to herein will, when executed and delivered by the
Sellers and the Shareholders, constitute the legal, valid and binding obligation
of
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the Sellers and the Shareholders, enforceable in accordance with their
respective terms.
3.03 No Violation. Except as set forth on Schedule 3.03, the execution,
delivery and performance of this Agreement and the agreements and documents
referred to herein, and the consummation of the transactions contemplated herein
and therein, will not, with or without the passage of time or the giving of
notice, or both:
(a) Conflict with or result in a violation or breach of, or a
default, right to accelerate, or loss of rights under, or require the consent,
authorization, waiver by, filing or registration with, or notice to any
Governmental Authority or any person or entity under:
(i) any provision of the articles of incorporation or
bylaws of any of the Sellers;
(ii) any franchise, mortgage, deed of trust, security
agreement, pledge agreement, lease, license, permit, instrument, Contract,
consent, approval or waiver (in each case, whether oral or written) which would
have a Material Adverse Effect on the Sellers, the Business or the Assets;
(iii) any Legal Requirement which would have a Material
Adverse Effect on the Sellers, the Business or the Assets; or
(iv) any Order arising from any Proceeding to which the
Sellers are a party or by which the Sellers or the Assets are bound or affected
which would have a Material Adverse Effect on the Sellers, the Business or the
Assets; or
(b) Result in the creation or imposition at or after the Closing of
any Lien upon any of the Acquired Assets.
3.04 Capitalization; Ownership; Directors and Officers. The authorized
capitalization of each Seller consists of 1,000 shares of common stock of the
par value of $1.00 per share. All shares of common stock of each Seller are
issued and outstanding, and no shares are held in treasury. The issuance of all
of the shares of common stock of each Seller was duly authorized, and all of the
shares are validly issued, fully paid and nonassessable. No Seller has
authorized the issuance of any other capital stock or security. The record and
beneficial ownership of the issued and outstanding shares of common stock of
each Seller is as set forth on Schedule 3.04. The duly elected and incumbent
directors and officers of the Sellers are identified on Schedule 3.04.
3.05 No Subsidiaries. There are not and never have been any subsidiaries,
direct or indirect, wholly-owned or otherwise, of any
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Seller. Except as set forth on Schedule 3.05, none of the Sellers has any
equity, financial, record, ownership or other interest in, or control, direct or
indirect, over any corporation, joint venture, general partnership, limited
partnership, limited liability company or other entity.
3.06 No Options. Except as set forth on Schedule 3.06, the Sellers and the
Shareholders do not have outstanding any option, warrant, convertible security
or other right to purchase or convert any obligation into shares of the Sellers'
stock, and have not agreed to issue or sell shares of the Sellers' stock. None
of the Sellers has any obligation, contingent or otherwise, to sell, lease,
assign, transfer or otherwise dispose of any of the Assets, or any interest
therein (other than in the ordinary course of the Business consistent with past
practice), to merge or consolidate with any person or entity, or to enter into
any similar or related transaction.
3.07 Financial Statements. Attached hereto as Schedule 3.07(A) are true,
correct and complete copies of the audited balance sheets of Oak Mountain Energy
and ▇▇▇▇▇ as at December 31, 1995, and December 31, 1994, and the related
audited statements of income, changes in stockholders' equity and cash flow for
Oak Mountain Energy and ▇▇▇▇▇ for the years then ended, together with the notes
to such financial statements and the report of ▇▇▇▇▇ & Associates, P.C. with
respect to the financial statements for the period ending December 31, 1995, and
the report of Stone, Avant & Co. with respect to the financial statements for
the period ending December 31, 1994. Attached hereto as Schedule 3.07(B) are
true, correct and complete copies of the company prepared balance sheets of each
of the Sellers as at December 31, 1996, and the related company prepared
statements of income, changes in stockholders' equity and cash flow for the
twelve month period then ended, together with the notes to such financial
statements. Except as described in Schedule 3.07(B), the financial statements
contained in Schedules 3.07(A) and 3.07(B) (and the related notes) have been
prepared, and those to be delivered to the Buyer under Section 5.01(d) will be
prepared, in accordance with generally accepted accounting principles and fairly
present the financial condition and the results of operations, changes in
stockholders' equity and cash flow of each of the Sellers as at the respective
dates of and for the periods referred to in such financial statements. Except as
set forth on Schedule 3.07(C), the financial statements referred to in this
Section 3.07 reflect, and those to be delivered under Section 5.01(d) shall
reflect, the consistent application of such accounting principles throughout the
periods involved and have been, and will be, prepared from and in accordance
with the books and records of the Sellers. Kodiak, Cahaba, Coal Handling and
Mountaineer did not engage in any activity or operation prior to January 1,
1996, and do not have financial statements, audited or otherwise, for any period
prior to January 1, 1996.
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3.08 No Undisclosed Liabilities. Except for the liabilities disclosed in
the schedules hereto, to the Knowledge of the Sellers there is no liability or
obligation of any kind, nature or description (whether absolute, accrued,
contingent or otherwise) of any Seller that is not reflected on or reserved
against in the Balance Sheet of said Seller as at December 31, 1995 (or the
notes thereto) which would directly or indirectly generate, precipitate,
initiate, cause, give rise to or result in any liability, obligation,
settlement, loss, damage, expense or diminution in value in excess of $200,000
with respect to the Sellers, the Business or the Assets, other than liabilities
or obligations incurred in the ordinary course of business of such Seller since
December 31, 1995, consistent with past practice. Notwithstanding anything in
this Section 3.08 to the contrary, to the extent that any representation or
warranty in this Article III is limited to the Actual Knowledge of the Sellers
(an "Actual Knowledge Representation"), this Section 3.08 shall not impose any
greater liability on the Sellers and the Shareholders with respect to the
subject matter of such Actual Knowledge Representation than that imposed by such
Actual Knowledge Representation.
3.09 Absence of Changes. Since December 31, 1995, except as disclosed in
Schedule 3.09 and the other schedules attached hereto (other than Schedule
2.05(a)), the Sellers have operated the Business only in the ordinary course
consistent with past practice and there has not been, with respect to the
Sellers:
(a) any change in the Business or the Sellers' financial condition
which has had or, to the Actual Knowledge of the Sellers, would have, a Material
Adverse Effect on the Sellers, the Business or the Assets, except such changes
that have occurred in the ordinary course of the Business;
(b) the incurrence of any indebtedness or other obligation to pay
money or some other valuable property, either presently or in the future
(including loans, borrowings, lines of credit, bonds, debentures, capital leases
or other similar credit facilities, whether short-term, long-term or otherwise)
in excess of $50,000 or the creation of any Lien on any of the Assets having an
aggregate value in excess of $50,000;
(c) except as set forth on Schedule 3.09(c), any increase, or any
announcement of any increase, in the wages, salaries, compensation, bonuses,
commissions, incentives, pension or other benefits payable by the Sellers to any
director, officer or employee of the Sellers;
(d) any new agreement, plan, policy, program or arrangement to pay
pensions, retirement allowances or other employee benefits to any director,
officer or employee, whether past or present, including any severance or
consulting arrangement;
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(e) any commitment or amendment to any pension, profit-sharing,
deferred compensation, group insurance, severance pay, retirement or other
employee benefit plan, fund or similar arrangement in existence on the date
hereof;
(f) any capital expenditure in excess of $50,000;
(g) any damage, destruction or loss (whether or not covered by
insurance) to all or any part of the Acquired Assets, other than damage,
destruction or losses which, in the aggregate over such period, did not directly
or indirectly generate, precipitate, initiate, cause, give rise to or result in
any liability, obligation, settlement, loss, damage, expense or diminution in
value in excess of $100,000 with respect to the Sellers, the Business or the
Assets; or
(h) any declaration, setting aside or payment of any dividend or
other distribution on or in respect of its shares of capital stock, or any
direct or indirect redemption, retirement, purchase or other acquisition of any
such shares.
3.10 Condition and Sufficiency of Acquired Assets. The Acquired Assets
include all interests, rights, properties and other assets necessary for the
Buyer to own, operate, manage and maintain the Business in all material respects
in the same manner as the Business is owned, operated, managed and maintained by
the Sellers. No interests, right, property or asset necessary for the ownership,
operation, management or maintenance of the Business in the manner in which the
Sellers presently own, operate, manage and maintain the Business is owned by any
person or entity other than one of the Sellers.
3.11 Accounts Receivable; Bank Accounts.
(a) Schedule 2.01(g) sets forth a true, correct and complete list of
all Accounts Receivable as of January 31, 1997. The Accounts Receivable
identified on Schedule 2.01(g) represent, and the Accounts Receivable as of the
Closing Date will represent, valid obligations arising from sales actually made
or services actually performed in the ordinary course of the Business.
(b) Schedule 2.01(m) contains a true, correct and complete list of
all bank accounts used by the Sellers for the Business, including the bank, the
account number, the type of account and the person(s) authorized with respect to
each account.
3.12 Title to Acquired Assets; Liens.
(a) Except as set forth on Schedule 3.12(a)(i): (i) the Sellers
have good and marketable title to all of the Acquired Assets, free and clear of
any Lien; and (ii) the interests and
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rights in and to the Acquired Assets to be conveyed to Buyer hereunder include
all assets, properties, interests and rights reasonably necessary for the Buyer
to use the Acquired Assets as now used by the Sellers, free from damage and
unreasonable interference by others who may have other interests or rights in
and to the Acquired Assets. To the Actual Knowledge of the Sellers, the map
attached hereto as Schedule 3.12(a)(ii) shows the true and correct boundaries of
the Owned Real Property, the Leased Real Property and the property subject to
the Real Property Contracts, taking into account minor distortions of boundary
lines which may arise because of the scale of said map.
(b) To the Knowledge of the Sellers, the interests in real property,
coal, oil, gas and other minerals described on Schedule 2.01(a) constitute all
of such property owned by the Sellers. The Real Property Leases and the Real
Property Contracts constitute all Contracts of the Sellers pursuant to which the
Sellers lease, sublease or otherwise possess any occupancy, usage or mining
rights with respect to any real property, coal, oil, gas or other minerals.
(c) Except as set out on Schedule 3.12(c)(i), all of the Real
Property Leases and the Real Property Contracts are valid and in full force and
effect in accordance with their respective terms, free and clear of any Lien.
Except as set forth on Schedule 3.12(c)(ii) and except for defaults,
circumstances or states of fact which would not have a Material Adverse Effect
on the Sellers, the Business or the Assets, the Sellers are not in default under
the Real Property Leases or the Real Property Contracts in any respect and, to
the Knowledge of the Sellers, no other party thereto is in default thereunder
nor, to the Actual Knowledge of the Sellers, does there exist any circumstance
or state of facts which constitute, or with the passage of time or the giving of
notice, or both, would constitute a default thereunder. The Sellers have
delivered to the Buyer true and correct copies of all of the Real Property
Leases and the Real Property Contracts, including all amendments and
modifications thereto.
(d) To the Knowledge of the Sellers, and except as set forth on
Schedule 3.12(d), there are no adverse claims to the Owned Real Property, the
Real Property Leases, the rights of the Sellers under the Real Property Leases,
or the property subject to the Real Property Contracts or the rights of the
Sellers thereto. The Sellers have not received any notice of default under any
of the Real Property Leases or Real Property Contracts, and to the Knowledge of
the Sellers the quiet possession of the Leased Real Property by the Sellers has
not been disturbed.
(e) To the Knowledge of the Sellers, and except as disclosed on
Schedule 3.12(e), there are no facts or circumstances which, with the giving of
notice or the passage of time, or both,
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would constitute grounds for a forfeiture under any of the Real Property Leases.
To the Actual Knowledge of the Sellers, and except as set forth in any of the
Real Property Leases, each of the lessors under the Real Property Leases has
good and marketable title to all surface property, coal and other real property
interests leased thereunder, together with all rights necessary to mine and
remove such coal by deep mining methods, and necessary ancillary rights to
conduct mining by such methods, and, to the Actual Knowledge of the Sellers, has
the right to lease or sublease the same to the Sellers in accordance with the
terms of the Real Property Leases.
(f) Except as set forth in Schedule 3.12(f) and in the Real Property
Leases and the Real Property Contracts, the Sellers are not dependent upon any
rights of others to use or occupy any real property, or interests in real
property, in connection with the Business. To the Knowledge of the Sellers, the
Sellers own or control all material ancillary rights (including surface access
rights, rights of ingress and egress, rights-of-way, access to utilities and
similar rights) to provide access to, and to permit the mining, processing,
production and selling of coal from, the Owned Real Property, the Leased Real
Property and the property subject to the Real Property Contracts, free from
interference or use by others. To the Actual Knowledge of the Sellers, there are
no parties other than the Sellers in possession of the Owned Real Property, the
Leased Real Property or the property subject to the Real Property Contracts. To
the Knowledge of the Sellers, there are no parties asserting a right of
possession adverse to the possession of the Sellers to the Owned Real Property,
the Leased Real Property or the property subject to the Real Property Contracts.
To the Knowledge of the Sellers, there are no parties asserting title adverse to
the title of the Sellers to the Owned Real Property, the Real Property Leases or
the property subject to the Real Property Contracts which, if successful, would
materially detract from the value or materially interfere with the use of such
property by the Sellers.
(g) The Sellers and the Shareholders understand that the Buyer
intends to proceed to mine coal from the ▇▇▇▇▇▇▇ and Coke seams of coal included
within the Assets pursuant to mining plans one of which is expected to take as
its starting point the face of the ▇▇▇▇▇▇▇ seam now being mined by ▇▇▇▇▇.
Assuming the existence of coal as reflected in studies obtained by the Sellers
and heretofore provided to the Buyer, and assuming the existence of reasonable
mining conditions (i.e. the lack of geological or physical conditions which
would prohibit or inhibit the mining process from continuing in a
non-interruptible manner), the Sellers and ▇▇▇▇ warrant that there are no
deficiencies in title to the coal under the Real Property Leases that would
prevent the Buyer from mining in a continuous manner within the ▇▇▇▇▇▇▇ seam or
the Coke seam so that a total of 30,000,000 tons of coal can be
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extracted from said seams. It is specifically understood that this paragraph is
not intended for the Sellers and ▇▇▇▇ to warrant that 30,000,000 tons of coal
exists or is capable of being mined or will be mined or removed from the ▇▇▇▇▇▇▇
or Coke seams; this representation and warranty is specifically limited to
matters pertaining to title to said coal.
3.13 Contracts. Except for the Real Property Leases and the Real Property
Contracts, Schedule 2.01(e) contains a true, correct and complete list of all
material Contracts to which the Sellers are a party or by which they or any of
the Acquired Assets or the Business is bound. Except as set forth on Schedule
3.13, and except for matters that would not have a Material Adverse Effect on
the Sellers, the Business or the Assets, the Sellers are in compliance with the
terms and conditions of the Other Contracts and all of the Other Contracts are
valid, binding and enforceable in accordance with their respective terms, and no
breach or default by the Sellers or event which, with the giving of notice or
the passage of time, or both, would constitute a breach or default by the
Sellers, exists with respect thereto, and no party thereto has given notice or
asserted to the Sellers that the Sellers are in default thereunder and, to the
Actual Knowledge of the Sellers, no other party thereto is in breach or default
thereunder.
3.14 Permits and Licenses.
(a) Schedule 3.14(a) contains a true, correct and complete list of
all permits, licenses, bonds, orders, approvals and other authorizations of any
Governmental Authority that are required under any Legal Requirement, including
any Environmental Law (as hereinafter defined in Section 3.19(c)), to engage in
or conduct the mining and related operations of the Business substantially in
the manner as currently conducted (the "Mining Permits").
(b) Schedule 3.14(b) contains a true, correct and complete list of
all permits, licenses, bonds, orders, approvals and other authorizations (other
than the Mining Permits) of any Governmental Authority that are required under
any Legal Requirement, including any Environmental Law, to engage in or conduct
the Business substantially in the manner as currently conducted (the "Other
Permits"), except such permits, licenses, bonds, orders, approvals and other
authorizations of any Governmental Authority the absence or lack of which would
not have a Material Adverse Effect on the Sellers, the Business or the Assets.
The Other Permits and the Mining Permits are hereinafter collectively referred
to as the "Required Permits."
(c) Except as set forth on Schedule 3.14(c):
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(i) Each of the Required Permits is in full force and effect
and there is no Proceeding pending or, to the Knowledge of the Sellers,
threatened relative to any of the Required Permits;
(ii) Each of the Sellers is in compliance with the terms,
provisions and conditions of the Required Permits, except such failures to
comply which would not have a Material Adverse Effect on the Sellers; and there
is no outstanding violation with respect to any of the Required Permits, nor, to
the Knowledge of the Sellers, any Order, notice of violation, notice of
noncompliance or agreement affecting any of the Required Permits, except those
which would not have a Material Adverse Effect on the Sellers, the Business or
the Assets;
(iii) To the Knowledge of the Sellers, no condition exists and
no event has occurred which constitutes a material violation of or a failure to
comply with any term or requirement of any of the Required Permits or which
would result, directly or indirectly, in the suspension, revocation, withdrawal,
cancellation or termination of, or any modification to, any of the Required
Permits;
(iv) To the Knowledge of the Sellers, all applications
required to be filed for the renewal of the Required Permits have been duly and
timely filed with the appropriate Governmental Authority and all other filings
required to have been made with respect to the Required Permits have been duly
and timely made with the appropriate Governmental Authority, except where any
failure to duly and timely file would not have a Material Adverse Effect on the
Sellers, the Business or the Assets; and
(v) The Sellers have not received any notice from any source
to the effect that they are lacking any permit, license, bond, Order, approval
or other authorization of any Governmental Authority that is required under any
Legal Requirement, including any Environmental Law, to engage in or conduct the
Business where the failure to have such permit, license, bond, Order, approval
or other authorization would have a Material Adverse Effect on the Sellers, the
Business or the Assets.
(d) The Sellers have supplied to the Buyer copies of all Orders,
notices of violations, notices of noncompliance, Contracts and material
correspondence relating to the Required Permits.
3.15 Intangible and Intellectual Property. The intangible and intellectual
property identified in Schedule 2.01(j) constitutes all of such property owned,
leased or licensed by the Sellers and is all of the intangible and intellectual
property which is necessary for the conduct of the Business. To the Knowledge of
the Sellers, the Sellers are not infringing upon
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or otherwise acting adversely to the rights of any other person or entity
whatsoever under or with respect to any copyrights, trade names, trademarks,
patents, patent applications or patent rights, and there is no such claim
pending or threatened against the Sellers with respect thereto.
3.16 Tax Matters.
(a) All federal, state, local and other tax returns with respect to
the Business (including income, franchise, ad valorem, estimated tax, and state
or local sales or use tax returns) have been timely filed by the Sellers as
required by law, and all taxes (including black lung excise taxes), assessments,
interest, penalties, fines, fees and other governmental charges upon the Sellers
or upon any of the Assets, or the income or franchises of the Business, which
are due, have been paid in full or adequate provision therefor has been included
by each of the Sellers in the balance sheet as at December 31, 1996, for each
such Seller. The federal and state income tax returns of the Sellers have not
been audited by the Internal Revenue Service or the applicable state taxing
authority, except as set forth on Schedule 3.16. To the Knowledge of the
Sellers, all items of income, gain, loss, deduction and credit have been
properly determined and reported by the Sellers in accordance with the rules of
the applicable Governmental Authority.
(b) Proper and accurate amounts have been withheld by the Sellers
from their respective employees for all periods in full and complete compliance
with the tax withholding provisions of applicable federal, state and local law.
Proper and accurate federal, state, local and other returns have been filed by
the Sellers for all periods for which returns are due with respect to employment
taxes (including income tax withholding, FICA, Medicare and FUTA and state
unemployment taxes); and the amounts due for such taxes (whether payable by the
Sellers or withheld from their employees) have been paid in full or adequate
provision thereof has been included by each of the Sellers in the balance sheet
as at December 31, 1996, for each such Seller.
(c) Except as set forth on Schedule 3.16, there are no pending
Proceedings relating to, or claims asserted for, taxes or assessments of any
kind against the Sellers; nor are there outstanding any agreements or waivers
extending the statutory period of limitation applicable to any federal, state or
local tax return for any period. Except as set forth on Schedule 3.16, no claim
has been made by any taxing authority against any of the Sellers for additional
taxes, or any interest thereon or penalties or fines related thereto, that has
not been paid or otherwise disposed of.
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(d) Each of the Sellers has properly filed and received
acknowledgement from the Internal Revenue Service of its election to be taxed
under Subchapter S of the Internal Revenue Code of 1986, as amended, effective
as of the date of incorporation of each Seller, and the Subchapter S election
has not been voluntarily, involuntarily or inadvertently terminated with respect
to any subsequent tax year.
3.17 Litigation.
(a) Except as otherwise set out on Schedule 3.17(a), there is no
action, Proceeding or claim pending against the Sellers, or, to the Actual
Knowledge of the Sellers, threatened, and, to the Actual Knowledge of the
Sellers, no basis exists which would give rise to any action, Proceeding or
claim, (i) which relates to or involves, or which would have a Material Adverse
Effect on, any of the Sellers, the Assets or the Business or (ii) which
questions the validity of this Agreement, the transactions contemplated herein,
or of any actions taken or to be taken by the Sellers or the Shareholders in
connection with this Agreement. None of the Sellers and the Shareholders, the
Assets or the Business is subject to any Order which would have a Material
Adverse Effect on the Sellers, the Business or the Assets.
(b) The Sellers have not received notice of, or been served with
process in, any condemnation or eminent domain proceeding against or affecting
any of the Assets, any interest therein or any portion thereof. Except as
otherwise set out on Schedule 3.17(b), no written notice or other written
communication from any Governmental Authority of any violation of any Legal
Requirement or Order, including any violation relating to zoning, employees,
wages, and occupational health and safety, applicable to any of the Assets or
the Business has been filed or communicated to the Sellers and the Shareholders,
except such notices or communications as have been complied with in all respects
and except where the failure to comply with such notices or communications would
not have a Material Adverse Effect on the Sellers, the Business or the Assets.
3.18 Insurance.
(a) Except as set forth thereon, Schedule 3.18(a) contains a true,
correct and complete list of all insurance policies and bonds to which the
Sellers are a party or that provide coverage to the Sellers, which list
identifies the insurer, type of coverage, policy number and such other
information necessary to properly identify the policy or bond.
(b) Except as set forth on Schedule 3.18(b):
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(i) all insurance policies and bonds listed on Schedule
3.18(a) are valid and enforceable and are sufficient for compliance in all
respects with all Legal Requirements and Contracts to which the Sellers are
parties or by which they or any of their properties are bound, except such
failures to comply with any Legal Requirement or Contract which would not have a
Material Adverse Effect on the Sellers, the Business or the Assets;
(ii) None of the Sellers has received any refusal of coverage,
notice of cancellation or any indication that any insurance policy or bond
listed on Schedule 3.18(a) is no longer in full force or effect;
(iii) The Sellers have paid all premiums due and have
otherwise performed all of their obligations under each insurance policy and
bond listed on Schedule 3.18(a), except where any such failure to perform would
not materially adversely affect the Sellers' rights under such policies; and
(iv) The Sellers have given timely notice to the insurer of
all claims that the Sellers believe to be insured by any insurance policy of the
Sellers identified on Schedule 3.18(a).
3.19 Environmental Matters.
(a) Except as set forth on Schedule 3.19(a):
(i) To the Knowledge of the Sellers, the Sellers are in and
have been in compliance with all applicable Environmental Laws, except where
such failure to comply would not directly or indirectly generate, precipitate,
initiate, cause, give rise to or result in any liability, obligation,
settlement, loss, damage, expense or diminution in value in excess of $100,000
with respect to the Sellers, the Business or the Assets;
(ii) To the Knowledge of the Sellers, all real property owned,
operated, leased, licensed or used by the Sellers and, to the Actual Knowledge
of the Sellers, all property adjacent to such real property is free from
contamination by any Hazardous Material, except such contamination which is
usual and customary in deep coal mining operations and which would not directly
or indirectly generate, precipitate, initiate, cause, give rise to or result in
any liability, obligation, settlement, loss, damage, expense or diminution in
value in excess of $100,000 with respect to the Sellers, the Business or the
Assets;
(iii) To the Knowledge of the Sellers, none of the Sellers is
subject to Environmental Costs and Liabilities and no facts or circumstances
could give rise to Environmental Costs and Liabilities, except (A) such
Environmental Costs and Liabilities which arise in the ordinary course of a deep
coal mining operation
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or (B) such Environmental Costs and Liabilities which are not the result of a
violation of any Environmental Law, Order or Contract with any Governmental
Authority or any person or entity and which would not directly or indirectly
generate, precipitate, initiate, cause, give rise to or result in any liability,
obligation, settlement, loss, damage, expense or diminution in value in excess
of $100,000 with respect to the Sellers, the Business or the Assets;
(iv) To the Knowledge of the Sellers, neither the Sellers nor
any of their Facilities or operations, nor, to the Actual Knowledge of the
Sellers, any predecessor of any of the Sellers, any owner of property leased or
operated by the Sellers, any property or Facility to, on or over which Hazardous
Material generated by the Sellers or any person or entity for whose conduct the
Sellers are responsible was transported, treated, stored, handled, transferred,
dumped or recycled, are subject to any Order of or any Contract with any
Governmental Authority or any person or entity, or to any Proceeding respecting
(A) applicable Environmental Laws, (B) Remedial Action, (C) any Environmental
Claim or (D) the Release or threatened Release of any Hazardous Material;
(v) There is no Environmental Claim or Proceeding pending or
threatened against the Sellers or the Assets alleging violation of or seeking to
impose liability pursuant to any Environmental Law;
(vi) Neither the Sellers nor, to the Actual Knowledge of the
Sellers, any owner of property leased, licensed or operated by the Sellers, have
filed any notice under federal, state, local or foreign law indicating past or
present treatment, storage or disposal, or reporting a Release or threatened
Release, of Hazardous Material on or into the Environment; and
(vii) To the Knowledge of the Sellers, there is not now, nor,
to the Actual Knowledge of the Sellers, has there been in the past, on, in or
under any real property owned, leased, licensed or operated by the Sellers (A)
any underground storage tanks, aboveground storage tanks, dikes, or
impoundments; (B) any asbestos or asbestos containing materials; (C) any
polychlorinated biphenyls; or (D) any radioactive substances.
(viii) Notwithstanding anything to the contrary contained in
this Section 3.19(a), to the extent that the representations and warranties
contained in clauses (i), (ii), (iii), (iv) and (vii) above relate to leases of
mineral rights in portions of the Leased Real Property which have been mined by
persons or entities other than the Sellers, each of the representations and
warranties contained therein is made only to the Actual Knowledge of the
Sellers.
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(b) To the Knowledge of the Sellers, Schedule 3.19(b) contains a
true, correct and complete list of any reports, studies, analyses, tests or
monitorings possessed or initiated by the Sellers and the Shareholders
pertaining to Hazardous Materials in, on or under the Facilities or concerning
compliance by the Sellers with Environmental Laws.
(c) As used in this Section and this Agreement, the following
capitalized terms shall have the meaning given to them in this subsection:
(i) "Environment" means soil, land surface or subsurface
strata, surface waters (including navigable and nonnavigable waters and ocean
waters), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
(ii) "Environmental Claim" means any notice of violation,
action, Proceeding, Lien arising under any Environmental Law, written demand or
claim, Order or directive (conditional or otherwise) issued, filed or asserted
by any Governmental Authority or any person or entity for personal injury
(including sickness, disease or death), tangible or intangible property damage,
damage to the Environment, nuisance, pollution, contamination or other adverse
effects on the Environment, or for fines, penalties or restrictions resulting
from or based upon (i) the existence, or the continuation of the existence of a
Release (including, without limitation, sudden or non-sudden accidental or
non-accidental Releases) of, or exposure to, any Hazardous Material, odor or
audible noise in, into or onto the Environment at, in, by, from or related to
any property owned, operated or leased by the Sellers or any activities or
operations of the Sellers; (ii) the generation, transportation, storage,
treatment or disposal of Hazardous Materials in connection with any property
owned, operated or leased by the Sellers or their operations or Facilities, or
(iii) the violation, or alleged violation of any Environmental Law, Order or
Environmental Permit of or from any Governmental Authority relating to
environmental matters connected with any property owned, leased or operated by
the Sellers.
(iii) "Environmental Costs and Liabilities" means any and all
losses, liabilities, obligations, corrective or remedial measures, damages,
fines, penalties, judgments, capital expenditures, claims, costs and expenses
(including, without limitation, costs of financial responsibility obligations,
disbursements and expenses of legal counsel, experts, engineers and consultants
and the costs of investigation and feasibility studies and Remedial Action)
arising from, under or pursuant to any applicable Environmental Law or any
Proceeding, Order or Contract,
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involving any Governmental Authority or any person or entity relating to the
Environment.
(iv) "Environmental Law" means any federal, state, local or
municipal law (including common law), statute, code, ordinance, rule, regulation
or other Legal Requirement relating to the Environment including the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. ss. 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. ss. 6901, et seq., the Clean Water Act, 33 U.S.C. ss. 1251, et seq.,
the Clean Air Act, 33 U.S.C. ss. 2601 et seq., the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et. seq., the Federal Insecticide, Fungicide, and Rodenticide
Act, 7 U.S.C. ss. 136 et seq., and the Oil Pollution Act of 1990, 33 U.S.C. ss.
2701 et seq., as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state or local
statutes.
(v) "Environmental Permits" means any permit, approval,
authorization, license, variance, registration or permission required under any
applicable Environmental Law or Order relating to the Environment.
(vi) "Facilities" means any real property, leasehold or other
interest owned, leased, licensed or operated by the Sellers.
(vii) "Hazardous Material" means any substance, material or
waste which is regulated by any Governmental Authority, including any material,
substance or waste which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," extremely hazardous waste," "restricted
hazardous waste," "contaminant," "toxic waste," or "toxic substance" under any
provision of any applicable Environmental Law, including petroleum, petroleum
products, chemical, asbestos, presumed asbestos-containing material or
asbestos-containing material, urea formaldehyde and polychlorinated biphenyls.
(viii) "Release" means any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching, or migration on or into the indoor or outdoor Environment
or into or out of any property, whether or not intentional, negligent or
otherwise.
(ix) "Remedial Action" means all actions, including any
capital expenditures required or voluntarily undertaken to (A) clean up, remove,
treat, or in any other way address any Hazardous Material or other substance;
(B) prevent the Release or threat of Release, or minimize the further Release of
any Hazardous Material or other substance so it does not migrate or endanger or
threaten
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to endanger public health or welfare or the Environment; (C) perform
pre-remedial studies and investigations or post-remedial monitoring and care; or
(iv) bring Facilities on any property owned, operated or leased by the Seller
and the Facilities located and operations conducted thereon into compliance with
all Environmental Laws and Environmental Permits.
3.20 Employee Matters.
(a) Schedule 3.20(a) hereto identifies (i) each "employee benefit
plan" as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that is covered by ERISA and that is
or has been maintained or otherwise contributed to by any of the Sellers for the
benefit of any employees of the Sellers (a "Plan" and collectively the "Plans"),
copies or descriptions of which have been furnished or made available to the
Buyer (together with the most recent Annual Report on Form 5500 required to be
filed in connection with any Plan), and (ii) each plan or arrangement not
subject to ERISA maintained or otherwise contributed to by the Sellers for the
benefit of employees and providing for deferred compensation, bonuses, stock
options, employee insurance coverage or any similar compensation or welfare
benefit plan (a "Benefit Arrangement"), copies or descriptions of which have
been furnished or made available to the Buyer.
(b) Each Plan or Benefit Arrangement (an "Employee Benefit Program")
has been maintained and administered at all times in compliance with all Legal
Requirements, including ERISA and the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to such Employee Benefit Programs and in such a manner
as to obtain the intended tax consequences, except such failures to comply which
would not have a Material Adverse Effect on the Sellers, the Business or the
Assets.
(c) No "reportable event" (as such term is used in Section 4043 of
ERISA), "prohibited transaction" (as such term is used in Section 406 of ERISA
or Section 4975 of the Code) or "accumulated funding deficiency" (as such term
is used in Section 412 or Section 4971 of the Code) has heretofore occurred with
respect to any Plan.
(d) Neither the Sellers nor any ERISA affiliate of the Sellers has
contributed to or participated in any pension plan which is a "multiemployer
plan," as defined in Section 3(37) of ERISA, in respect of any of the Sellers'
employees.
(e) Except as disclosed on Schedule 3.20(e), no Proceeding involving
an Employee Benefit Program has occurred or is pending or, to the Knowledge of
the Sellers, is threatened.
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(f) Except as set forth in Schedule 3.20(f) hereto, there are no
other employment agreements or Contracts with any of the Sellers' employees.
3.21 Labor Matters. The Sellers are not parties to or bound by any
collective bargaining agreement, memorandum of understanding, recognition
agreement or Contract with any collective bargaining agent or representative of
the Sellers' employees. None of the Sellers has ever entered into any collective
bargaining agreement, memorandum of understanding, recognition agreement or
Contract with any collective bargaining agent or representative, nor have the
Sellers ever entered into a contract mining agreement or other arrangement
wherein, to the Knowledge of the Sellers, the person or entity conducting the
mining was a party, or had at any time been a party, to any collective
bargaining agreement, memorandum of understanding, recognition agreement or
Contract with any collective bargaining agent or representative. None of the
Shareholders have ever entered into any collective bargaining agreement,
memorandum of understanding, recognition agreement or Contract with any
collective bargaining agent or representative which could give rise, directly or
indirectly, to any liability or obligation being incurred by or imposed upon the
Sellers, the Buyer or the Assets. There are no labor controversies pending or,
to the Actual Knowledge of the Sellers, threatened against the Sellers by any
employee, labor organization, or Governmental Authority.
3.22 Workers' Compensation; Black Lung.
(a) The Sellers have continuously since commencement of any
activities of the Sellers and in accordance with all Legal Requirements carried
insurance providing coverage for any liability arising from any workers'
compensation claim filed by any of the Sellers' employees, and there has been no
lapse in such insurance coverage, and there are no uninsured workers'
compensation or intentional tort claims now pending, or, to the Actual Knowledge
of the Sellers, threatened or anticipated.
(b) The Sellers have continuously since commencement of any
activities of the Sellers and in accordance with all Legal Requirements carried
insurance providing coverage for any liability arising from any federal black
lung claim filed by any of the Sellers' employees, and there has been no lapse
in such insurance coverage, and there are no uninsured black lung claims now
pending, or, to the Actual Knowledge of the Sellers, threatened or anticipated.
3.23 Compliance with Law. Except as set forth in Schedule 3.23:
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(a) to the Knowledge of the Sellers, the Sellers are, and at all
times have been in compliance with all Legal Requirements applicable to the
Sellers, the Business or the Assets, except (A) such failures to comply which
have been remedied and for which there is no further liability or obligation to
any Governmental Authority or person or entity on account thereof and (B) such
failures to comply which would not directly or indirectly generate, precipitate,
initiate, cause, give rise to or result in any liability, obligation,
settlement, loss, damage, expense or diminution in value in excess of $100,000
with respect to the Sellers, the Business or the Assets;
(b) to the Knowledge of the Sellers, no event has occurred or
circumstance exists which, with or without the passage of time or the giving of
notice, or both:
(i) would constitute or result in a violation by the Sellers
of, or a failure on the part of the Sellers to comply with, any Legal
Requirement which would directly or indirectly generate, precipitate, initiate,
cause, give rise to or result in any liability, obligation, settlement, loss,
damage, expense or diminution in value in excess of $100,000 with respect to the
Sellers, the Business or the Assets; or
(ii) would give rise to any obligation on the part of the
Sellers to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature which would directly or indirectly generate, precipitate,
initiate, cause, give rise to or result in any liability, obligation,
settlement, loss, damage, expense or diminution in value in excess of $100,000
with respect to the Sellers, the Business or the Assets; and
(c) None of the Sellers has received any notice or other
communication (whether oral or written) from any Governmental Authority or any
person or entity regarding:
(i) any actual or alleged violation of, or failure to
comply with, any Legal Requirement; or
(ii) any actual or alleged obligation on the part of the
Sellers to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature.
3.24 Related Parties; Conflicts of Interest. Except as set forth on
Schedule 3.24 to this Agreement, no officer, director or shareholder of any of
the Sellers, nor any Affiliate of any of the foregoing: (a) owns, directly or
indirectly, any interest in, or is an employee or agent of, any entity which is
a competitor, lessor, lessee, customer or supplier of the Sellers or the
Business; (b) owns, directly or indirectly, any interest in any tangible or
intangible property, asset or right which is part of the Acquired
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Assets or which is used in or pertains to the Business; (c) has any cause of
action or claim against, owes any amount to, or is owed any amount by the
Sellers or the Business; (d) is a party to any Contract with or Proceeding
involving the Sellers or relating to the Business; or (e) received a loan, gift
or advance from the Sellers or the Business in the three year period preceding
the Closing Date.
3.25 Mining and Geological Information. The Sellers and the
Shareholders have provided by the Buyer all material geological data, reserve
data, mine maps, core hole logs and associated data, coal measurements, coal
samples, lithologic data, coal reserve calculations or reports, washability
analyses or reports, mine plans, mining feasibility studies or analyses, mining
permit applications and supporting data, preparation plant flowcharts,
preparation plant efficiency reports or analyses, engineering studies and all
other information, maps, material, reports and data in the possession or under
the control of the Sellers or the Shareholders relating to or affecting the coal
reserves, coal ownership, coal leases to the Sellers, coal leases from the
Sellers to third parties, mining conditions, mines, preparation plant(s) and
mining plans of the Sellers (collectively the "Mining Data"). To the Knowledge
of the Sellers, true, correct and complete copies of the Mining Data, together
with all exhibits, maps or supporting appendices thereto, have been delivered to
the Buyer.
3.26 Reclamation. Except as disclosed on Schedule 3.26, and except for
matters which would not have a Material Adverse Effect on the Sellers, the
Business or the Assets, (A) all reclamation, environmental and related work
required by or under any Required Permit, Order of any Governmental Authority or
any reclamation bond issued or held in connection with the Business or any of
the Assets has been performed and completed in all respects in accordance with
all applicable terms, conditions and Legal Requirements, and (B) the Sellers and
the Shareholders are not delinquent or in default in carrying out and performing
in all respects all such required reclamation, environmental and related work.
3.27 Brokers or Finders. None of the Sellers nor any of the Sellers'
officers, directors, employees or agents, nor any of the Shareholders, have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
the sale of the Acquired Assets or the transactions contemplated by this
Agreement.
3.28 Disclosure. Except for statements or omissions which would not
directly or indirectly generate, precipitate, initiate, cause, give rise to or
result in any liability, obligation, settlement, loss, damage, expense or
diminution in value in excess of $200,000 with respect to the Sellers, the
Business or the Assets, no representation, warranty, information or statement
made
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by the Sellers and the Shareholders in this Agreement or in any schedule or
exhibit hereto contains any untrue statement of fact or omits to state any fact
necessary in order to make the representation, warranty, information or
statement herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Sellers and the
Shareholders as follows:
4.01 Corporate Organization and Standing. The Buyer is a limited liability
company duly organized and validly existing under the laws of the State of
Alabama. The Buyer has the requisite power and authority to carry on its
business as it is now being and contemplated to be conducted and to own and
operate its properties and assets.
4.02 Authorization. The Buyer has the requisite power and authority to
execute, deliver and perform this Agreement and the agreements and documents
referred to herein, and to consummate the transactions contemplated herein and
therein. The Buyer has taken all actions required by law, its articles of
organization and operating agreement or otherwise to authorize the execution,
delivery and performance of this Agreement and the agreements and documents
referred to herein, and to consummate the transactions contemplated herein and
therein. This Agreement and the agreements and documents referred to herein
will, when executed and delivered by the Buyer, constitute the legal, valid and
binding obligation of the Buyer enforceable in accordance with their respective
terms.
4.03 No Violation. Except as set forth on Schedule 4.03, the execution,
delivery and performance of this Agreement and the agreements and documents
referred to herein, and the consummation of the transactions contemplated herein
and therein, will not, with or without the passage of time or the giving of
notice, or both, conflict with or result in a violation or breach of, or a
default, right to accelerate, or loss of rights under, or require the consent,
authorization, waiver by, filing or registration with, or notice to any
Governmental Authority or any person or entity under:
(a) any provision of the articles of organization or operating
agreement of the Buyer;
(b) any franchise, mortgage, deed of trust, security agreement,
pledge agreement, lease, license, permit, instrument, Contract, consent,
approval or waiver (in each case, whether oral or written) which would have a
Material Adverse Effect on the Buyer;
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(c) any Legal Requirement which would have a Material Adverse Effect
on the Buyer or the transactions contemplated hereby; or
(d) any Order arising from any Proceeding to which the Buyer is a
party or by which the Buyer may be bound or affected which would have a Material
Adverse Effect on the Buyer or the transactions contemplated hereby.
4.04 Disclosure. Except for statements or omissions which would not have a
Material Adverse Effect on the Buyer, no representation, warranty, information
or statement made by the Buyer in this Agreement or in any schedule or exhibit
hereto contains any untrue statement of fact or omits to state any fact
necessary in order to make the representation, warranty, information or
statement herein or therein not misleading.
4.05 Brokers and Finders. Neither the Buyer nor any of the Buyer's
members, managers, officers, employees or agents have incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with the purchase of the
Acquired Assets or the transactions contemplated by this Agreement.
4.06 Litigation. There is no Proceeding or claim pending or, to the
Knowledge of the Buyer, threatened which questions the validity of this
Agreement, the transactions contemplated herein, or any actions taken or to be
taken by the Buyer in connection with this Agreement.
4.07 Financial Statements. Attached hereto as Schedule 4.07 is a true,
correct and complete copy of the company prepared balance sheet of the Buyer
dated as of December 31, 1996. Said balance sheet has been prepared in
accordance with generally accepted accounting principles and fairly presents the
financial condition of the Buyer as of the date thereof.
ARTICLE V
COVENANTS BEFORE CLOSING
5.01 Covenants of the Sellers and the Shareholders Before the Closing.
From the date of this Agreement to the Closing Date, the Sellers and the
Shareholders hereby agree to, and the Shareholders hereby agree to cause the
Sellers to comply with, the following:
(a) Affirmative Covenants - Operation of the Business. Except as the
Buyer may otherwise consent to in writing (it being understood that for purposes
of this Section 5.01 the consent of the Buyer must be evidenced by a writing
signed on behalf of the Buyer by ▇▇▇▇ ▇. ▇▇▇▇▇▇):
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(i) Operation of the Business. The Sellers shall hold and use
the Assets and conduct the Business, and keep its books and records, only in the
ordinary course of the Business consistent with past practice. The Sellers shall
report to the Buyer periodically or promptly upon the Buyer's request concerning
the status of the Business and the finances of each of the Sellers; and they
shall confer with the Buyer before implementing any operational, management,
personnel or other decision of a material nature. The Sellers shall maintain the
Tangible Personal Property to be conveyed hereunder in good condition and
repair, normal wear and tear excepted. The Sellers shall maintain insurance on
the Assets and the Business, in full force and effect with responsible
companies, comparable in amount, scope and coverage to that in effect on the
date of this Agreement.
(ii) Preservation of the Business. Without making any
commitment on the Buyer's behalf, the Sellers and the Shareholders shall use
their best efforts to preserve the Business, including preserving the Sellers'
business organizations intact, keeping available the services of the current
officers, employees and agents of the Sellers, keeping in full force and effect
all material rights relating to the Assets and the Business and maintaining the
relations and good will of the Sellers with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with the
Sellers.
(iii) Compliance with Contracts and Licenses. The Sellers
shall fully and promptly perform and comply with each term, provision, condition
and limitation of, and take all reasonable actions to keep in full force and
effect, each of the Real Property Leases, the Real Property Contracts, the Other
Contracts and the Required Permits in accordance with their terms.
(iv) Compliance with Law. The Sellers shall duly comply with
all Legal Requirements and Orders applicable to the Assets or the Business.
(b) Negative Covenants-Operation of the Business. Except as the
Buyer may otherwise consent to in writing:
(i) Liens. The Sellers shall not, in whole or in part,
encumber, pledge, mortgage or subject to any Lien all or any part of the Assets
or any right or interest therein.
(ii) Sales of Assets. The Sellers shall not convey, sell or
otherwise transfer all or any part of the Assets or any right or interest
therein, or grant or sell any option or right to purchase all or any part of the
Assets, except in the ordinary course of the Business consistent with past
practice.
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(iii) Contracts and Licenses. The Sellers shall not agree to
or permit any modification, alteration or amendment of any of the terms,
provisions, or conditions, or any termination, of any of the Real Property
Leases, the Real Property Contracts, the Other Contracts or the Required
Permits.
(iv) Inventories. The Sellers shall not allow the inventories
of coal or the levels of raw materials, supplies, spare parts and other
materials needed for the Business and included in the Acquired Assets to vary
materially from the levels maintained consistent with past practices and except
through sales in the ordinary course of the Business consistent with past
practice.
(v) Settlements and Compromises. The Sellers shall not enter
into any compromise or settlement of any Proceeding relating to the Assets, the
Assumed Liabilities or the Business.
(vi) Dividends and Distributions. The Sellers shall not
declare or pay any dividends or any other distributions of any kind or character
on, or purchase or otherwise acquire or agree to acquire for consideration of
any kind, any shares of their common stock.
(vii) Compensation. The Sellers shall not increase, or enter
into any new agreement or plan for, the compensation of any director, officer or
employee.
(c) Conduct. Except as provided for in this Agreement, or as the
Buyer may otherwise consent to in writing, the Sellers and the Shareholders
shall not enter into any transaction, take any action, or, to the best of the
ability of the Sellers and the Shareholders, permit any event to occur, which
would result, at any time, in any of the representations and warranties
contained in this Agreement, or the information set forth on any Schedule
attached hereto, not being true and correct immediately after such transaction
has been entered into or consummated, or immediately after such event has
occurred, or on the Closing Date.
(d) Interim Financial Statements. The Sellers shall deliver to the
Buyer within 25 days after the end of each month a copy of the company-prepared
balance sheet of each Seller for such month and the related company prepared
statements of income and cash flow for such month, together with the notes to
such financial statements.
(e) Advice of Changes. The Sellers shall promptly advise the Buyer
in writing of any occurrence, fact or condition of which any of the Sellers
becomes aware which, if it had taken place, had existed or had been known on the
date hereof, would cause or constitute a breach of any representation or
warranty under this Agreement. Should any such occurrence, fact or
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condition require any change to any schedule to this Agreement, the Sellers
shall promptly deliver to the Buyer a written supplement to the affected
schedule specifying such change. During the same period, the Sellers and the
Shareholders also shall promptly notify the Buyer of the occurrence of any event
that would make the satisfaction of the conditions in Article VIII impossible or
unlikely.
(f) Access. Each of the Sellers shall provide to the Buyer and to
its counsel, accountants and other representatives full and free access during
normal business hours to all of the Sellers' properties, personnel, Contracts,
books and records, and other documents and data relevant to the Assets or the
Business and shall furnish to the Buyer and such representatives all such
additional financial, operating, and other relevant information and data with
respect to the Assets and the Business that the Buyer may, from time to time,
reasonably request. The Buyer shall have the right to make copies of all such
Contracts, books and records and other documents and data, at its expense. The
Sellers shall cooperate and assist, to the extent reasonably requested by the
Buyer, with the Buyer's investigation of the Assets and the Business.
(g) Cooperation. The Sellers and the Shareholders shall, upon
request of the Buyer or its representatives, execute and deliver all documents,
provide information, testify in any Proceeding, and do all other acts that may
be reasonably necessary, incidental or advisable, in the Buyer's opinion, to
consummate the transactions contemplated in this Agreement, including the
financing to be obtained by the Buyer, all without further consideration;
provided, however, that the Buyer shall reimburse the Sellers and the
Shareholders for their reasonable, pre-approved out-of-pocket expenses incurred
in performing the obligations under this subsection.
(h) Consents and Approvals.
(i) General. The Sellers and the Shareholders shall use their
best efforts to obtain, in writing, as promptly as possible all approvals,
consents and authorizations required to be obtained in order to effect the
transactions contemplated under this Agreement, which shall be in form and
substance satisfactory to the Buyer and its counsel, and shall deliver to the
Buyer copies of all such approvals, consents and authorizations.
(ii) Required Approvals. As promptly as practicable after the
date of this Agreement, the Sellers and the Shareholders shall make all filings
legally required to be made by them to effect the transactions contemplated
under this Agreement (including all filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
("HSR Act")) and shall cooperate with the Buyer in taking all further actions to
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obtain such approvals as soon as practicable (including taking all actions
requested by the Buyer to cause early termination of any applicable waiting
period under the HSR Act). The Sellers and the Shareholders shall also cooperate
with the Buyer and its representatives in regard to all filings the Buyer elects
or is legally required to make to effect the transactions contemplated under
this Agreement and obtaining such approvals as soon as practicable.
(iii) Estoppel Certificates. The Sellers and the Shareholders
shall obtain a certificate dated not more than 30 days before the Closing Date,
from each party contracting with the Sellers under the Contracts set forth on
Schedule 5.01(h)(iii) certifying that, so far as the interests of the certifying
party are concerned the relevant Contract is in good standing and in full force
and effect, that the relevant Contract has not been amended, supplemented or
extended (except as set out in this Agreement or any Schedule to this Agreement)
and that no known default, or known event that, with notice or the passage of
time, or both, would constitute a default under the relevant Contract has
occurred and is continuing.
(i) No Negotiations. Upon execution of this Agreement, the Sellers
and the Shareholders shall immediately terminate all discussions with any person
or entity (other than the Buyer) relating to any transaction involving the sale
of any of the shares of stock or Assets of the Sellers (other than sales of
assets in the ordinary course of the Business consistent with past practice),
and shall promptly request in writing the return of all information distributed
to any third party relating to the Sellers or the Assets. From the date of this
Agreement until such time as this Agreement shall be terminated pursuant to
Section 9.01, the Sellers and the Shareholders shall not, directly or
indirectly, solicit, initiate or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of, act on or bring to a vote of the directors or shareholders of any
of the Sellers any inquiries or proposals from any person or entity (other than
the Buyer) relating to any transaction involving (A) the sale of any of the
Assets (other than in the ordinary course of the Business consistent with past
practice), (B) the sale by any of the Shareholders of his stock in any of the
Sellers, or any part thereof, (C) the sale of the Business or any part thereof,
or (D) the merger, consolidation or other reorganization of any of the Sellers.
After the Closing, the Sellers and the Shareholders shall use reasonable efforts
to recover any information regarding the Sellers and the Assets not returned by
any third party.
(j) Corporate Approvals. The Sellers and the Shareholders shall
promptly take all actions necessary to obtain all approvals by the directors or
shareholders of Sellers, or both,
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of the transactions contemplated in this Agreement as required by law and the
articles of incorporation and the bylaws of the Sellers. In any vote of the
shareholders of the Sellers on the transactions contemplated herein, the
Shareholders agree to vote their shares of stock in the Sellers in such a manner
as to approve the transactions contemplated in this Agreement.
(k) Best Efforts. The Sellers and the Shareholders shall use their
best efforts to cause the conditions in Article VIII to be satisfied.
5.02 Covenants of the Buyer Before the Closing. From the date of this
Agreement to the Closing Date:
(a) Permits. The Buyer shall, as soon as practicable, file all
documents and information, and respond to any and all requests for information
and documents, which may be required by any Governmental Authority for the
transfer, assignment or termination and reissuance of any of the Required
Permits.
(b) Confidentiality. The Buyer shall keep confidential and shall not
disclose any of the documents and information related to the Assets or the
Business which the Buyer reviews or has in its possession to any third party,
other than the Buyer's counsel, accountants consultants and other authorized
representatives.
(c) Best Efforts. The Buyer shall use its best efforts to cause the
conditions in Article VII to be satisfied.
(d) Cooperation. The Buyer shall, upon the reasonable request of the
Sellers, execute and deliver all documents, provide information, testify in any
Proceeding, and do all other acts that may be reasonably necessary, incidental
or advisable, in the Sellers' opinion, to consummate the transactions
contemplated in this Agreement.
(e) Financing. The Buyer shall use its best efforts to obtain the
financing which is a condition precedent in Section 8.10.
ARTICLE VI
OTHER COVENANTS
The Buyer and the Sellers and the Shareholders hereby agree to, and the
Shareholders hereby agree to cause the Sellers to comply with, the following:
6.01 Property Taxes. The Buyer shall assume ad valorem property taxes in
accordance with Schedule 2.05(a).
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6.02 Removal of Excluded Assets. All Excluded Assets shall be removed by
the Sellers and the Shareholders, at their expense, from any property which is a
part of the Acquired Assets no later than sixty (60) days after the Closing
Date, unless the Buyer otherwise consents in writing to a longer period for such
removal, such consent not to be unreasonably withheld. The Sellers and the
Shareholders hereby release the Buyer from any liability or obligation with
respect to the Excluded Assets and agree to maintain adequate insurance with
respect thereto, naming the Buyer as an additional named insured, until such
time as all of the Excluded Assets are removed as provided herein. If the
Sellers and the Shareholders fail to remove such property within said 60 day
period, or such longer period consented to by the Buyer, then at the expiration
of such period, the Buyer may, in its sole discretion, remove and dispose of
such property and the Sellers and the Shareholders shall reimburse the Buyer for
the costs, expenses and liabilities relating to such removal and disposal. The
Buyer hereby grants the Sellers access to the property which is a part of the
Acquired Assets and on which any Excluded Asset is situate for the purpose of
the removal thereof.
6.03 Existing Citations. Without affecting the responsibility of the
Sellers and the Shareholders for the Retained Liabilities, the Sellers and the
Shareholders specifically agree that they shall, from and after the date hereof,
diligently seek to remedy and correct, prior to the Closing, any and all
violations or deficiencies relating to or affecting the Assets or the Business
that are set out in Schedule 3.14(c) attached hereto.
6.04 Remedial Action. Without affecting the responsibility of the Sellers
and the Shareholders for the Retained Liabilities, responsibility for taking and
bearing the expense of any remedial action required by any notice, Order,
citation, letter, report, or other directive issued by any Governmental
Authority, with respect to the Assets or the Business shall be allocated among
the parties as follows:
(i) If such notice, Order, citation, letter, report or other
directive is issued on or before the Closing Date relating to activities or
operations conducted outside the ordinary course of business, or is issued after
the Closing Date relating to operations or activities conducted outside the
ordinary course of business on or before the Closing Date, the Sellers and the
Shareholders shall be responsible for taking the remedial action required, all
at the expense of the Sellers and the Shareholders.
(ii) If such notice, Order, citation, letter, report or other
directive is issued on or before the Closing Date relating to activities or
operations conducted in the ordinary course of business, or is issued after the
Closing Date relating to activities or operations conducted in the ordinary
course of
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business on or before the Closing Date, the Buyer shall be responsible for
taking the remedial action required, all at the expense of the Buyer.
(iii) If such notice, Order, citation, letter, report or other
directive is issued after the Closing Date relating to any of the Excluded
Assets, the Retained Liabilities, or the operations or activities of the Sellers
related to the Excluded Assets or the Retained Liabilities after the Closing
Date, the Sellers and the Shareholders shall be responsible for taking the
remedial action required, all at the expense of the Sellers and the
Shareholders.
(iv) If such notice, Order, citation, letter, report or other
directive is issued after the Closing Date relating to operations or activities
conducted by the Buyer after the Closing Date, the Buyer shall be responsible
for taking the remedial action required, at the Buyer's expense.
6.05 Transfer of Permits. If the consent of any Governmental Authority or
any person or entity is required as a condition of the assignment and transfer
to the Buyer of any of the Required Permits, the Buyer and the Sellers and the
Shareholders agree to cooperate fully with each other in every reasonable way
and to take all reasonable steps to obtain such consent and to effect such
assignments and transfers. If any of such Required Permits cannot be assigned
and transferred to the Buyer, the Buyer may promptly apply for a replacement;
and the Sellers agree to cooperate fully in every reasonable way to obtain such
replacement. In the event all of the conditions precedent to the Closing have
been either satisfied or waived except for the condition precedent contained in
Section 8.03, the parties agree to close the transaction contemplated in this
Agreement in escrow pending satisfaction of the condition precedent in Section
8.03 pursuant to a mutually satisfactory escrow agreement.
6.06 Assigned Contracts. To the extent that any of the Contracts to be
assigned hereunder is not assignable without the consent of another party, this
Agreement shall not constitute an assignment or an attempted assignment thereof,
if such assignment would constitute a breach thereof. If the Sellers shall be
unable to obtain a consent necessary for the assignment of their title to,
interest in, or rights under any Contract to be assigned hereunder, then, if the
Buyer waives such consent as a condition to the performance of its obligations
hereunder, the Sellers and the Shareholders will fully cooperate in any
reasonable arrangement designed to enable the Sellers and the Shareholders to
perform their obligations hereunder, and to provide for the assumption by the
Buyer of the benefits, risks and burdens of any such Contract, including
enforcement at the cost of and for the account of the Buyer of any and all
rights of any of the Sellers against the other party thereto arising out of the
future cancellation thereof after
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the Closing by such other party; but the Buyer shall not be required by this
Section to enter into, or to accept as a substitute for performance by the
Sellers and the Shareholders hereunder, any arrangement that would impose any
material additional cost, expense or liability on the Buyer or that would
deprive the Buyer of any material benefits or rights contemplated to be
transferred to the Buyer pursuant to the transactions contemplated under this
Agreement.
6.07 Accounts Receivable. From and after the Closing, (i) the Buyer shall
undertake to collect the Accounts Receivable, (ii) if requested by the Buyer,
the Sellers and the Shareholders shall cooperate with the Buyer in the
collection of the Accounts Receivable, and (iii) the Sellers and the
Shareholders shall promptly remit to the Buyer all monies received by them in
payment of the Accounts Receivable.
6.08 Sellers' Employees. It is understood and agreed to by the parties
hereto that, upon the Closing of the transactions contemplated in this
Agreement, the Buyer has no obligation to hire or employ any of the employees of
the Sellers. The Sellers shall, prior to the Closing, discharge all of their
employees before the Closing, pay all wages, salaries, bonuses, accrued
vacation, vehicle lease payments, bereavement pay, jury duty pay, sick leave
pay, severance pay and accrued holiday pay (including related payroll and
withholding taxes) owing to the Sellers' employees and make all payments on
behalf of the Sellers' employees to any pension, retirement, profit-sharing
plan, thrift-savings plan, or deferred compensation plan, if any. The Sellers
agree to promptly use all sums paid to them under Section 2.03(e) for the sole
purpose of discharging their obligations under this Section 6.08. Any sums paid
to the Sellers under Section 2.03(e) which are not used by the Sellers to
discharge their obligations under this Section 6.08 shall be promptly returned
to the Buyer.
6.09 Specific Performance. The Sellers and the Shareholders acknowledge
that the Buyer will have no adequate remedy at law if the Sellers and the
Shareholders fail to perform their obligations under this Agreement; and the
Buyer acknowledges that the Sellers and the Shareholders will have no adequate
remedy at law if the Buyer fails to perform any of its obligations under this
Agreement. If the Sellers and the Shareholders fail to perform any of their
obligations under this Agreement, the Buyer shall have the right, in addition to
any other rights it may have, to specific performance of this Agreement. If the
Buyer fails to perform any of its obligations under this Agreement, the Sellers
and the Shareholders shall have the right, in addition to any other rights they
may have, to specific performance of this Agreement.
6.10 Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or fail to be consummated for any
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reason whatsoever, the responsibility for payment of the costs and expenses of
the transactions contemplated in this Agreement shall be allocated as follows:
(a) The Sellers and the Shareholders shall be responsible for and
shall pay the following costs and expenses:
(i) all sales, use, bulk sales, transfer and other taxes
payable to any Governmental Authority in connection with the transactions
contemplated by this Agreement;
(ii) all transfer, filing, excise, documentary, revenue stamp
and similar fees and taxes payable in connection with the transactions
contemplated by this Agreement; and
(iii) one-half of all fees paid to the Federal Trade
Commission or the Department of Justice in connection with any filings required
under the HSR Act; and
(iv) all charges, costs and fees owed to any accountants,
financial advisors, attorneys and other consultants, professionals, experts,
agents or representatives engaged by any of the Sellers and the Shareholders in
connection with the transactions contemplated by this Agreement.
(b) The Buyer shall be responsible for and shall pay the following
costs and expenses:
(i) all licensing fees and taxes payable to the State of
Alabama in connection with the registration of certificates of title to all
motor vehicles transferred by the Sellers to the Buyer pursuant to this
Agreement;
(ii) all recording fees payable in connection with the
transactions contemplated by this Agreement;
(iii) one-half of all fees paid to the Federal Trade
Commission or the Department of Justice in connection with any filings required
under the HSR Act; and
(iv) all charges, costs and fees owed to any accountants,
financial advisors, attorneys and other consultants, professionals, experts,
agents or representatives engaged by the Buyer in connection with the
transactions contemplated by this Agreement.
(c) With respect to any other costs or expenses, each of the parties
hereto shall pay its own costs and expenses.
(d) In the event of termination of this Agreement, the obligations
of each party to pay the costs and expenses as provided
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under the preceding subsections of this Section 6.10 will be subject to any
rights of such party arising from a breach of this Agreement by another party.
6.11 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated herein will be
issued, if at all, at such time and in such manner as the parties shall
determine. Unless consented to by the other parties hereto in advance (which
consent shall not be unreasonably withheld) or legally required, the parties
agree to keep the terms of this Agreement strictly confidential and to make no
disclosure thereof to any Governmental Authority or person or entity.
6.12 Confidentiality; Return and Retention of Documents. If the parties
fail to close the transactions contemplated in this Agreement for any reason
permitted hereunder, then the Buyer shall promptly return to the Sellers all
documents delivered by any of the Sellers to the Buyer or obtained by the Buyer
from any of the Sellers in connection herewith, and the Buyer shall not disclose
to third parties, unless required to do so by law, any information obtained from
any of the Sellers in connection with this Agreement or during the prior and
subsequent negotiations relating to this Agreement. The Sellers may, at their
expense, make and retain copies of any document of the Sellers delivered to the
Buyer which relates to the Assets and the Business as the Sellers deem advisable
for their files. After the consummation of the transaction contemplated in this
Agreement, the Sellers and the Shareholders shall not disclose to any third
party, unless required to do so by law, any information regarding the Acquired
Assets or the Business. In the event the Sellers and the Shareholders are
required by law to disclose any such information, the Sellers and the
Shareholders shall promptly notify the Buyer prior to any required disclosure
and shall cooperate with the Buyer to obtain a protective order for such
information required to be disclosed.
6.13 Further Assurances. At or after the Closing, the Sellers will, at the
request of the Buyer, execute and deliver to the Buyer all such further
assignments, agreements and other documents as the Buyer may reasonably request
in order to accomplish, and to perfect and record, if necessary, the sale,
conveyance, transfer and delivery to the Buyer of the Acquired Assets as
contemplated in this Agreement and to otherwise carry out the intent of this
Agreement.
6.14 Covenant Not to Compete. For a period of five years from the Closing
Date, the Sellers and ▇▇▇▇▇▇▇▇▇ hereby agree that they will not, individually or
collectively, directly or indirectly, within the State of Alabama, own, manage,
operate, control, be employed by, loan money to, participate in, or be connected
in any manner whatsoever with the ownership, management,
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financing, operation or control of any business engaged in the mining or
producing coal in Alabama, or marketing or selling coal to be used in Alabama,
or any other business conducted by the Sellers in connection with the Business.
If the final judgment of a court of competent jurisdiction declares that any
term or provision of this Section 6.14 is invalid or unenforceable, the parties
agree that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified after the expiration of the time within which the judgment may be
appealed.
6.15 Delivery of Promissory Notes. Immediately following the Closing, the
Buyer shall execute and deliver to the Shareholders, as appropriate, promissory
notes in amounts and upon terms and conditions substantially similar to those
attached hereto as Exhibits 6.15(A) and 6.15(B), and the Shareholders shall
simultaneously deliver to the Buyer the originals of all of the notes or other
evidences of indebtedness, marked canceled, which are being replaced by the
promissory notes delivered by the Buyer hereunder.
6.16 Change of Name; Liquidation. Contemporaneous with the Closing Date,
Oak Mountain Energy shall take all actions necessary or incidental to change its
name to one dissimilar to its present name and the Buyer's name. After the
Closing, each of the other Sellers shall promptly liquidate its assets and
dissolve.
6.17 Buyer's Financial Statements. So long as the Buyer has any obligation
to ▇▇▇▇▇▇▇▇▇ under the Note, Section 2.03(d) or the promissory note delivered to
▇▇▇▇▇▇▇▇▇ pursuant to Section 6.15, the Buyer shall provide ▇▇▇▇▇▇▇▇▇ with a
copy of the Buyer's quarterly internal financial statements and a copy of the
Buyer's annual audited financial statements as soon as reasonably possible after
the same have been completed. ▇▇▇▇▇▇▇▇▇ shall maintain such financial statements
in strict confidence and shall not use or disclose such financial statements to
any person or entity.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
SELLERS' AND THE SHAREHOLDERS' PERFORMANCE
The performance of the obligations of the Sellers and the Shareholders
under this Agreement is subject to the satisfaction, on or before the Closing
Date, of each of the following conditions, any or all of which may be waived, in
whole or in part, without prior notice:
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7.01 Performance of Agreements. The Buyer shall have performed, satisfied
and complied with, in all material respects, all covenants, agreements,
obligations and conditions required by this Agreement to be performed or
complied with by it on or before the Closing Date.
7.02 Accuracy of Representations and Warranties. All representations and
warranties of the Buyer contained in this Agreement or any written statement
delivered by the Buyer to the Sellers and the Shareholders under this Agreement
shall be true and correct in all respects on and as of the date of this
Agreement and on and as of the Closing Date, as though made on and as of that
date, without giving effect to any supplement to the Schedules hereto.
7.03 Absence of Litigation and Proceedings. No Proceeding or claim before
any Governmental Authority or any person or entity challenging the transactions
contemplated by this Agreement shall have been instituted or be pending; and no
Legal Requirement or Order of any Governmental Authority which prohibits the
sale of the Acquired Assets, or any material part thereof, to the Buyer or the
consummation of any of the transactions contemplated under this Agreement shall
have been adopted or issued or shall otherwise be in effect.
7.04 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act. If applicable, any waiting period for the HSR
Act shall have expired without a request for further information or a filing of
a complaint for injunctive relief.
7.05 Authority. The execution and delivery of this Agreement by the Buyer
and the performance of the Buyer's covenants and obligations hereunder shall
have been duly authorized by all necessary action of the Buyer and its members
and managers.
7.06 Deliveries. The Sellers and the Shareholders shall have received from
the Buyer all of the deliveries required to be made under Section 2.07(b).
7.07 Additional Documents. The Buyer shall have caused the delivery to the
Sellers and the Shareholders of such other documents as they may reasonably
request for the purpose of:
(i) enabling their counsel to provide the opinion referred
to in Section 2.07;
(ii) evidencing the accuracy of any representation or warranty
of the Buyer under this Agreement;
(iii) evidencing the Buyer's performance or satisfaction of,
or compliance with, in all material respects, any
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covenant or obligation required to be performed or complied with by the Buyer
under this Agreement prior to the Closing;
(iv) evidencing the satisfaction of any condition referred to
in this Article VII; or
(v) otherwise facilitating the consummation of any of the
transactions contemplated by this Agreement.
7.08 Release of Liability. Except for the release of ▇▇▇▇ and Oak Mountain
Energy under the contract identified as item 4 on Schedule 2.01(e), the Sellers
and the Shareholders shall have been released from any liability or obligation
under any guaranty or Contract relating to the Assumed Liabilities and
identified on Schedule 7.08. The Sellers and the Shareholders agree to use their
best efforts to assist the Buyer in obtaining the releases under this Section
7.08.
7.09 Documents Delivered. The form and substance of all consents,
approvals, certificates, instruments, opinions and other documents to be
delivered by or relating to Buyer under this Agreement shall be satisfactory in
all reasonable respects to the Sellers and their counsel.
7.10 Employment Agreements. The execution by the Buyer of employment
agreements with ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ substantially similar in form
and substance to those attached hereto as Exhibits 7.10(A) and 7.10(B).
ARTICLE VIII
CONDITIONS PRECEDENT TO THE BUYER'S PERFORMANCE
The performance of the obligations of the Buyer hereunder is subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions, any of which may be waived by the Buyer, in whole or in part,
without prior notice:
8.01 Performance of Agreements. The Sellers and the Shareholders shall
have performed, satisfied and complied with, in all material respects, all
covenants, agreements, obligations and conditions required by this Agreement to
be performed or complied with by them on or before the Closing Date.
8.02 Accuracy of Representations and Warranties. All representations and
warranties of the Sellers and the Shareholders contained in this Agreement or in
any written instrument delivered to the Buyer by the Sellers and the
Shareholders under this Agreement shall be true and correct in all respects as
of the date of this Agreement and as of the Closing Date, as though made on and
as of that date, without giving any effect to any supplement to the Schedules
hereto.
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8.03 Permits. All Required Permits for the Buyer's continuation after the
Closing of the Business as operated by the Sellers must have been transferred to
and obtained by the Buyer and must be in full force and effect.
8.04 Absence of Litigation and Proceedings.
(a) Except as set out in this Agreement or on a Schedule attached
hereto, no Proceeding or claim before any Governmental Authority (i) pertaining
to the transactions contemplated by this Agreement, or (ii) involving any of the
Assets or the Business shall have been instituted, be pending or, to the
Knowledge of the Sellers, be threatened on the Closing Date.
(b) Since the date of this Agreement, there must not have been
commenced or threatened against the Buyer or against any Affiliate of the Buyer
any Proceeding
(i) involving any challenge to, or seeking damages or other
relief in connection with, any of the transactions contemplated by this
Agreement, or
(ii) that is likely to have the effect of preventing,
delaying, making illegal, imposing limitations or conditions on, or otherwise
interfering with any of the transactions contemplated by this Agreement.
8.05 Documents Delivered. The form and substance of all consents,
approvals, certificates, instruments, opinions and other documents to be
delivered by or relating to the Sellers and the Shareholders under this
Agreement shall be satisfactory in all reasonable respects to the Buyer and its
counsel.
8.06 Material Adverse Changes. From the date of this Agreement to the
Closing Date, there shall not have been, or be, any material adverse change in
the Acquired Assets or the Business.
8.07 Authority. The execution and delivery of this Agreement by the
Sellers and the Shareholders and the performance of their obligations and
covenants hereunder shall have been duly authorized by all necessary action,
corporate or otherwise, of the Sellers and their shareholders.
8.08 No Prohibition. Neither the consummation nor the performance of any
of the transactions contemplated by this Agreement will directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of, or cause the Buyer or any Affiliate
of the Buyer to suffer any material adverse consequences under any Legal
Requirement or Order.
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8.09 Due Diligence. The Buyer shall have completed a due diligence
investigation satisfactory to the Buyer relating to the Assets, the Business,
the Sellers and the Shareholders. Without limiting the foregoing, such due
diligence investigation shall include receipt of environmental, reserve,
feasibility and other such studies with respect to the Assets and the Business
which are acceptable to the Buyer in its sole discretion, and receipt of (i)
title and lien searches and other evidence certifying that the title to the
Acquired Assets is as described in Section 3.12 and (ii) title abstracts or
similar reports acceptable to the Buyer relating to the title of the lessors to
the coal subject to the Real Property Leases.
8.10 Financing. The Buyer shall be in a position to close and receive
funding under a non-recourse long-term credit facility to provide funds to
consummate the transactions under this Agreement and to use and operate the
Acquired Assets after the Closing as contemplated by the Buyer. The financing
under the non-recourse long-term credit facility shall (i) be provided by a
lender or lenders reasonably satisfactory to the Buyer, and who accept the
existing contracts, lease, security and the executed asset purchase agreement
"as is", and (ii) be upon such terms and conditions as are (A) customary in
providing non-recourse financing for the acquisition and expansion of a large
scale deep coal mining operation on a non-recourse basis and (B) reasonably
satisfactory to the Buyer.
8.11 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act. If applicable, any waiting period for the HSR
Act shall have expired without a request for further information or a filing of
a complaint for injunctive relief.
8.12 Title Matters. The Buyer shall have obtained at standard rates from a
title insurance company satisfactory to the Buyer policies of title insurance,
or conditional commitments to issue same dated the Closing Date in face amounts
and in form satisfactory to the Buyer insuring the Buyer's interest in each
parcel of Owned Real Property identified on Schedule 2.01(a), subject only to
the matters set forth on Schedule 3.12(a) and such other matters as may be
approved by the Buyer in its sole discretion.
8.13 Deliveries. The Buyer shall have received from the Sellers and the
Shareholders all of the deliveries required to be made under Section 2.07(a).
8.14 Additional Documents. The Sellers and the Shareholders shall have
caused the delivery to the Buyer of such other documents as it may reasonably
request for the purpose of:
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(i) enabling their counsel to provide the opinion referred
to in Section 2.07;
(ii) evidencing the accuracy of any of the Sellers' and the
Shareholders' representations and warranties;
(iii) evidencing the Sellers and the Shareholders performance
or satisfaction of, or compliance with, in all material respects, any covenant
or obligation required to be performed or complied with by the Sellers and the
Shareholders under this Agreement prior to the Closing;
(iv) evidencing the satisfaction of any condition referred to
in this Article VIII; or
(v) otherwise facilitating the consummation or performance of
any of the transactions contemplated by this Agreement.
8.15 Employment Agreements. The execution by ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ of employment agreements with the Buyer substantially similar in form
and substance to those attached hereto as Exhibits 7.10(A) and 7.10(B).
8.16 Title Due Diligence. The Buyer shall not have discovered any defects
in the title to surface property or coal subject to the Real Property Leases
that would have a material adverse effect on the Buyer or the Acquired Assets.
ARTICLE IX
TERMINATION
9.01 Termination Events. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by either the Buyer or the Sellers and the Shareholders if a
material breach of any provision of this Agreement has been committed by any of
the parties on the other side of the transactions contemplated herein and such
breach has not been waived;
(b) by the Buyer, if any of the conditions in Article VIII has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of the Buyer to comply
with its obligations under this Agreement), and the Buyer has not waived such
condition on or before the Closing Date; provided, the Buyer's right of
termination under this Section 9.01(b) due to its findings as a result of its
due diligence investigation and inquiry pursuant to Section 8.09 above, and
which do not otherwise provide a right of termination by the Buyer hereunder,
shall expire at midnight on
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March ____, 1997, and further provided that the Buyer's right of termination
under this Section 9.01(b) due to a failure to comply with the Closing
conditions set forth in Section 8.04(a)(ii), 8.06 and 8.16 shall expire at
midnight on April 2, 1997;
(c) by the Sellers and the Shareholders, if any of the conditions in
Article VII has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of the
Sellers and the Shareholders to comply with their obligations under this
Agreement), and the Sellers and the Shareholders have not waived such condition
on or before the Closing Date;
(d) by mutual consent of the Buyer and the Sellers and the
Shareholders; or
(e) by either the Buyer or the Sellers and the Shareholders if the
Closing has not occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement) on or before midnight on April 2, 1997; provided, however, that if
all of the conditions precedent in Article VIII have been either satisfied or
waived by the Buyer except the conditions precedent in Section 8.10 or Section
8.11, and provided further, if the Buyer shall have provided the Sellers and the
Shareholders with a copy of a standard commitment letter with respect to the
financing specified in Section 8.10, containing usual and customary terms and
conditions for financings of like nature, the Buyer shall have the right to
extend the termination date from midnight on April 2, 1997, to midnight on April
17, 1997. In such event, the conditions to Closing not specifically terminating
in Section 9.01(b) above must be either satisfied or waived by Buyer before it
shall be obligated to satisfy its obligations hereunder on the Closing Date.
9.02 Effect of Termination. Each party's right of termination under
Section 9.01 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to Section 9.01,
all further obligations of the parties under this Agreement will terminate,
except that obligations in Sections 5.02(b), 6.10, 6.11, and 6.12 will survive;
provided, however, that if this Agreement is terminated by a party because of
the breach of this Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
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ARTICLE X
SURVIVAL; INDEMNIFICATION; REMEDIES
10.01 Survival. Subject to the limitations set forth in Section 10.4(a)
below, all representations, warranties, covenants, and obligations in this
Agreement (including indemnification obligations), the Schedules, the
supplements to the Schedules, and any certificate, document or conveyance
instrument delivered pursuant to this Agreement will survive the Closing. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, reimbursement, or other remedy with respect
to the breach or violation of any other representation, warranty, covenant or
obligation.
10.02 Indemnification and Reimbursement by the Sellers. Subject to the
limitations set forth in Section 10.04, the Sellers and the Shareholders,
jointly and severally, shall indemnify and hold harmless the Buyer, and its
managers, members, officers, representatives, agents, employees and Affiliates
(collectively, the "Indemnified Persons"), and will reimburse the Indemnified
Persons, for any loss, liability, claim, settlement, damage, expense (including
costs of investigation and defense and reasonable attorneys' fees, including
attorneys' fees connected with any enforcement of this covenant) diminution of
value, costs of cleanup, containment or other remediation, whether or not
involving a third-party claim (collectively, "Damages"), arising from or in
connection with any or all of the following:
(a) any breach of any representation or warranty made by the Sellers
and the Shareholders in this Agreement, the Schedules, the supplements to the
Schedules, the certificate delivered pursuant to Section 2.07(a), or any
conveyance instrument or any other document, writing or instrument delivered by
the Sellers and the Shareholders pursuant to this Agreement; or
(b) any breach by the Sellers and the Shareholders of any covenant
or obligation of the Sellers and the Shareholders in this Agreement, any
conveyance instrument or in any document, writing or instrument delivered by the
Sellers and the Shareholders pursuant to this Agreement.
10.03 Indemnification and Reimbursement by the Buyer. Subject to the
limitations set forth in Section 10.04, the Buyer will indemnify and hold
harmless the Sellers and the Shareholders, and their Affiliates and the Sellers'
stockholders, directors, officers, representatives and agents, and will
reimburse them for any Damages arising from or in connection with:
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(a) any breach of any representation or warranty made by the Buyer
in this Agreement or in any document, writing or instrument delivered by the
Buyer pursuant to this Agreement; or
(b) any breach by the Buyer of any covenant or obligation of the
Buyer in this Agreement or in any document, writing or instrument delivered by
the Buyer pursuant to this Agreement.
10.04 Limitations. The indemnification obligations under this Article X
shall be limited as follows:
(a) No indemnified party shall have any right to indemnification
under this Agreement from any indemnifying party, unless notice of the claim of
the party to be indemnified has been given to the indemnifying party within two
years after the Closing Date, provided, however, that:
(i) with regard to an indemnity claim relating to tax matters,
notice of the claim of the party to be indemnified must be given to the
indemnifying party on or before the expiration of the statute of limitations
applicable to such tax matters; and
(ii) the obligations of the Sellers and the Shareholders to
indemnify for Damages under any indemnity claim arising from or related to any
of the Excluded Assets, any of the Retained Liabilities, any general warranty of
title in any deed delivered to the Buyer pursuant to Section 2.07(a), or the
power and authority of the Sellers and the Shareholders to execute, deliver and
perform this Agreement and to consummate the transactions contemplated herein
shall continue indefinitely.
(b) Except as provided in Section 10.04(f), the Sellers and the
Shareholders shall have no obligation to indemnify the Indemnified Persons for
Damages under any indemnity claim until such time, if ever, as the aggregate
amount of all such Damages shall exceed $200,000 (the "Basket"), and then,
subject to Section 10.04(c) below, only to the extent of such excess. If there
is a breach of a representation or warranty that contains its own threshold
amount, then the entire Damages resulting from such breach shall be applied
against the Basket. For example, if there is a breach of Section 3.19(a)(i)
(which contains a $100,000 threshold amount), and the Damages resulting from
such breach total $150,000, then the entire $150,000 shall be applied against
the Basket.
(c) Except as provided in Section 10.04(f), the aggregate liability
of the Sellers and the Shareholders with respect to all indemnity claims shall
not exceed $13,000,000 (the "Ceiling Amount").
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(d) Except as provided in Section 10.04(f):
(i) the liability of ▇▇▇▇▇▇▇▇▇ with respect to any indemnity
claim shall not exceed 40% of the amount of such indemnity claim, and the
aggregate liability of ▇▇▇▇▇▇▇▇▇ with respect to all indemnity claims shall not
exceed 40% of the Ceiling Amount; and
(ii) the liability of ▇▇▇▇ with respect to any indemnity claim
shall not exceed 60% of the amount of such indemnity claim, and the aggregate
liability of ▇▇▇▇ with respect to all indemnity claims shall not exceed 60% of
the Ceiling Amount.
(e) Except as provided in Section 10.04(f) and in Subsection
10.04(e)(iii) below, until such time, if ever, as the aggregate amount of all
Damages asserted by the Buyer against the Sellers and the Shareholders under
this Article X exceeds $8,750,000, the Buyer and the Sellers and the
Shareholders agree that each indemnity claim asserted by the Buyer shall be
satisfied as follows:
(i) 40% of each such indemnity claim shall be satisfied by
immediately reducing the outstanding principal balance and accrued interest due
under the Note. Thereafter, the amount of each subsequent principal installment
due under the Note shall be adjusted so that the principal balance due
thereunder after set-off under this paragraph shall be paid over the remaining
term of the Note in approximately equal monthly installments. In the event the
principal balance and accrued interest due under the Note is less than 40% of
any indemnity claim, then the Buyer may satisfy such indemnity claim by
immediately reducing the outstanding principal balance and accrued interest due
under the Note to zero and proceeding against the Sellers and the Shareholders
under Subsection (iii) below with respect to that portion of the indemnity claim
not satisfied under this subparagraph (i).
(ii) the remaining 60% of each such indemnity claim (the
"Remaining Amount") shall be satisfied by ceasing all payments under the Royalty
Agreement and the bonus in paragraph 5 of the ▇▇▇▇ Employment Agreement until
such time as the amount of the payments which would have been paid under said
Royalty Agreement and bonus equals the Remaining Amount plus interest at the
rate of 10% per annum on that portion of the Remaining Amount outstanding from
time to time. Thereafter, payments under the Royalty Agreement and bonus under
paragraph 5 of the ▇▇▇▇ Agreement shall resume in accordance with their terms.
(iii) In the event the aggregate amount of all Damages
asserted by the Buyer against the Sellers and the Shareholders pursuant to this
Article X exceeds $8,750,000, the Buyer shall have the right to seek an
indemnity claim for such
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excess Damages from the Sellers and the Shareholders as provided under this
Agreement and by law.
(f) The limitations set forth in Sections 10.04(b), (c), (d) and (e)
shall not apply with respect to any obligation of the Sellers and the
Shareholders to indemnify for Damages under any indemnity claim arising from or
related in any way to (i) any of the Excluded Assets, (ii) any of the Retained
Liabilities, (iii) the breach or violation of any covenant of the Sellers and
the Shareholders in Section 6.04(i), 6.04(iii), 6.07, 6.08, 6.10, 6.13 or 6.14,
or (iv) any general warranty of title in any deed delivered to the Buyer
pursuant to Section 2.07(a).
(g) The Buyer shall have no obligation to indemnify the Sellers and
the Shareholders for Damages until such time, if ever, as the aggregate amount
of all such Damages shall exceed $200,000, and then only to the extent of such
excess; provided, however, that this limitation shall not apply with respect to
any obligation of the Buyer to indemnify for Damages under any indemnity claim
arising from or related in any way to the Acquired Assets or the Assumed
Liabilities.
(h) The provisions of this Article X shall not limit, restrict or
otherwise affect any representation or warranty contained in any agreement,
instrument or document delivered pursuant hereto.
(i) The indemnification obligations of the parties under this
Article X shall be effective only upon the Closing of the transactions
contemplated in this Agreement.
10.05 Procedure for Indemnification C Third-Party Claims.
(a) Within a reasonable time after receipt by an indemnified party
under Section 10.02 or Section 10.03 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such Proceeding, but the failure to
notify the indemnifying party will not relieve the indemnifying party of any
liability that it may have to any indemnified party, except to the extent that
the indemnifying party demonstrates that the defense of such Proceeding is
prejudiced by the indemnifying party's failure to give such notice.
(b) Except as provided in Section 10.05(c) and (d), if any
Proceeding referred to in Section 10.05(a) is brought against an indemnified
party and it gives notice to the indemnifying party of the commencement of such
Proceeding, the indemnifying party will be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party
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to such Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Article X for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, no compromise or
settlement of such claims may be effected by the indemnifying party without the
indemnified party's consent unless (x) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any person or
entity and no effect on any other claims that may be made against the
indemnified party; (y) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (z) the indemnified party will have
no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
days after notice from the indemnified party, give notice to the indemnified
party of its election to assume the defense of such Proceeding, the indemnifying
party will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to (i) defend such Proceeding (with counsel
reasonably satisfactory to the indemnified party and the indemnifying party) and
(ii) compromise or settle the same, but the indemnifying party will not be bound
by any compromise or settlement effected without its consent (which may not be
unreasonably withheld); provided, however, that with respect to a Proceeding
relating to the matters identified in Section 2.05(b)(v)(A) or (B), the Buyer
agrees that if it elects to assume the defense of such Proceeding, the Buyer
will be responsible for its own fees incurred in investigating the matter and
defending its interests.
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(d) Notwithstanding the other provisions of this Section 10.05, the
Buyer shall be entitled to control any cleanup, any related Proceeding, and any
other Proceeding with respect to any environmental matter for which indemnity is
sought hereunder.
(e) The Sellers and the Shareholders hereby consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought by a
third party against any Indemnified Person for purposes of any claim that an
Indemnified Person may have against the Sellers and the Shareholders under this
Agreement with respect to such Proceeding or the matters alleged therein, and
agree that process may be served on the Sellers and the Shareholders with
respect to such a claim anywhere in the world.
10.06 Procedure for Indemnification C Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE XI
GENERAL PROVISIONS
11.01 Entire Agreement; Amendment. This Agreement, together with the
attached Schedules and Exhibits and the supplements thereto, constitutes the
entire agreement among the parties with respect to the subject matter hereof and
may not be amended except by writing duly executed by the parties hereto.
11.02 Binding Effect and Benefit. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their respective successors
and permitted assigns.
11.03 Assignment. The rights and obligations of any party arising under
this Agreement, or any interest therein, shall not be assigned or otherwise
transferred, in whole or in part, without obtaining the prior written consent of
the other party or parties hereto.
11.04 Waiver. The waiver by any party to this Agreement of compliance by
any other party with, or of a breach of any other party of, any provision of
this Agreement shall be made in writing executed by the party waiving such
compliance and breach and shall be delivered to the party whose compliance or
breach is being waived. The waiver by any party hereto of compliance with or
breach of any provision of this Agreement shall not operate, or be construed, as
a waiver of any subsequent breach or failure to comply with any other provision
of this Agreement. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action or making such investigation
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of compliance by any other party hereto with any representation, warranty,
covenant or agreement contained in this Agreement.
11.05 Severability. So long as the remaining provisions of this Agreement
are sufficient to carry out the intent of the parties hereto, in the event one
or more of the provisions of this Agreement shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
any other provision of this Agreement, and the Agreement shall be construed as
if such invalid, illegal or unenforceable provision was not a part of this
Agreement.
11.06 Third Parties. Nothing in this Agreement, whether expressed or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to this Agreement and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third person
to any party to this Agreement, nor shall any provision give any third person
any right of subrogation or action over or against any party to this Agreement.
11.07 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Alabama without
regard to conflicts of laws principles.
11.08 Jurisdiction; Service of Process. Any Proceeding to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of Alabama, County
of Shelby,; and each of the parties hereto consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such Proceeding and
waives any objection to venue laid therein. Process in any Proceeding referred
to in the preceding sentence may be served on any party anywhere in the world.
11.09 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) on the date when delivered personally, (b) when transmitted by
telecopy (receipt confirmed), provided that a copy is mailed by the end of the
following business day by certified mail, return receipt requested, postage
prepaid; (c) on the fifth business day after mailing, by United States certified
mail, postage prepaid, return receipt requested, or (d) on the next business day
following deposit with a nationally recognized overnight delivery service for
next day delivery, to the parties at the following addresses and telecopy
numbers:
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TO THE SELLERS: [Name of appropriate Seller]
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
TO SHAREHOLDERS: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. De Buys, Esquire
▇▇▇▇ & ▇▇▇▇▇▇
Suite 3100, SouthTrust Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
TO THE BUYER: Oak Mountain Energy, L.L.C
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Anker Coal Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
and
Kiewit Alabama Mining Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address or telecopy number for the purposes of this
section by giving the other parties hereto written notice of such new address or
number in the manner set forth above.
11.10 Time of Essence. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
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11.11 Headings. The table of contents, lists of exhibits and schedules,
headings, and subheadings contained in this Agreement are included for purpose
of convenience of reference only and shall have no effect upon the construction
or interpretation of any of the provisions of this Agreement.
11.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original of this Agreement and
all of which, when taken together, shall be deemed to constitute one and the
same agreement. This Agreement shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
party, it being understood that all parties need not sign the same counterpart.
IN WITNESS WHEREOF, the Shareholders have executed this Agreement and the
Sellers and the Buyer have caused this Agreement to be executed below by their
respective officers or managers, as the case may be, duly authorized, all on the
date first above written.
The Buyer:
OAK MOUNTAIN ENERGY, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Its Manager
The Sellers:
OAK MOUNTAIN ENERGY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its President
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▇▇▇▇▇ RESOURCES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its President
KODIAK COAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its President
CAHABA COAL ENGINEERING AND LAND
SURVEYING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its President
COAL HANDLING AND PROCESSING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its President
MOUNTAINEER MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its President
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The Shareholders:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
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