EXHIBIT 10.8
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PURCHASE AND SALE AGREEMENT
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By and Among
EL PASO CGP COMPANY
COASTAL COAL COMPANY, LLC
COASTAL COAL - WEST VIRGINIA, LLC
ANR WESTERN COAL DEVELOPMENT COMPANY
(COLLECTIVELY "SELLERS")
and
CSTL LLC
(Buyer)
====================
Covering the Acquisition of
CERTAIN ASSETS OF COASTAL COAL COMPANY, LLC AND
COASTAL COAL - WEST VIRGINIA, LLC AND
ANR WESTERN COAL DEVELOPMENT COMPANY
====================
November 6, 2002
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATIONS
1.1. Definitions 1
1.2. Interpretations 1
2. PURCHASE AND SALE OF ASSETS
2.1. Purchase and Sale 1
2.2. Purchase Price 3
2.3. The Closing 3
2.4. Deliveries at the Closing 3
2.5. Assumed Liabilities 4
2.6. Retained Assets and Liabilities 4
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
3.1. Representations and Warranties Concerning the Sellers 4
3.2. Representations and Warranties of the Buyer 5
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE ASSETS
4.1. Representations and Warranties Concerning the Assets 6
4.2. Limitations of Representations and Warranties 8
5. PRE-CLOSING COVENANTS
5.1. Satisfaction of Conditions Precedent 9
5.2. Notices and Consents 9
5.3. Operation of Business 9
5.4. Access to Information 10
5.5. Contact with Customers and Vendors 10
5.6. Amendment of Schedules 10
5.7 Financial Statements 11
6. POST-CLOSING COVENANTS
6.1. General 11
6.2. Delivery and Retention of Records 11
6.3. Employee Matters 12
7. CONDITIONS PRECEDENT
7.1. Conditions to Obligation of the Buyer 12
7.2. Conditions to Obligation of the Sellers 13
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8. REMEDIES FOR BREACHES OF AGREEMENT
8.1. Survival of Representations, Warranties and Certain Covenants 14
8.2. Indemnification Provisions for Benefit of the Buyer 14
8.3. Indemnification Provisions for Benefit of the Sellers 15
8.4. Matters Involving Third Parties 15
8.5. Determination of Amount of Adverse Consequences 16
8.6. Tax Treatment of Indemnity Payments 16
9. TAX MATTERS
9.1. Post-Closing Tax Returns 16
9.2. Pre-Closing Tax Returns 16
9.3. Prorated Ad Valorem Taxes 17
9.4. Claims for Refund 17
9.5. Cooperation on Tax Matters 17
9.6. Certain Taxes 18
9.7. Confidentiality 18
9.8. Audits 18
9.9. Control of Proceedings 18
9.10. Powers of Attorney 18
9.11. Remittance of Refunds 18
9.12. Purchase Price Allocation 19
9.13. Closing Tax Certificate 19
10. TERMINATION OF AGREEMENT
10.1. Termination of Agreement 19
10.2. Effect of Termination 20
11. MISCELLANEOUS
11.1. Insurance 20
11.2. Press Releases and Public Announcements 20
11.3. No Third Party Beneficiaries 20
11.4. Succession and Assignment 20
11.5. Counterparts 20
11.6. Notices 20
11.7. Governing Law 21
11.8. Entire Agreement 21
11.9. Severability 22
11.10. Transaction Expenses 22
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EXHIBITS
Exhibit A: Definitions and Interpretations
Exhibit B: Description of Assets
Exhibit C: Form of Special Warranty Deed
Exhibit D: Form of Assignment Agreement -Overriding Royalty
Exhibit E: Form of Lease Agreements
Exhibit F: Form of Assignment Agreement - Leases
Exhibit G: Form of ▇▇▇▇ of Sale
Exhibit H: Disclosure Schedule
Exhibit I: Form of Legal Opinions
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") dated as of November
6, 2002 is by and among (1) EL PASO CGP COMPANY, a Delaware corporation ("El
Paso CGP"); COASTAL COAL COMPANY, LLC, a Delaware limited liability company
("Coastal Coal"); COASTAL COAL - WEST VIRGINIA, LLC, a Delaware limited
liability company ("Coastal Coal WV"); and ANR WESTERN COAL DEVELOPMENT COMPANY,
a Delaware corporation ("ANR WCDC") (individually a "Seller" and collectively
the "Sellers") and (2) CSTL LLC, a Delaware limited liability company, (the
"Buyer"). The Sellers and the Buyer are sometimes referred to collectively
herein as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, El Paso CGP, directly and through subsidiaries owns (1) all of
the outstanding membership interests of Coastal Coal and Coastal Coal WV and (2)
all of the issued and outstanding stock of ANR WCDC;
WHEREAS, Coastal Coal owns various real properties and coal reserves in
Virginia and Kentucky and Coastal Coal WV owns various real properties and coal
reserves in the state of West Virginia and each is qualified to do business in
the respective states where it owns property;
WHEREAS, ANR WCDC owns certain overriding royalty interests with respect
to certain lignite reserves located in North Dakota; and
WHEREAS, this Agreement contemplates a transaction in which the Buyer will
purchase, and Coastal Coal, Coastal Coal WV and ANR WCDC (collectively, the
"Seller Parties") will sell, certain of their respective rights, title and
interests in and to such real properties, coal reserves and royalties in return
for the consideration specified herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1 Definitions. Unless otherwise provided to the contrary in this
Agreement, capitalized terms in this Agreement shall have the meanings set forth
in Section 1.1 of Exhibit A.
1.2 Interpretations. Unless expressly provided to the contrary in this
Agreement, this Agreement shall be interpreted in accordance with the provisions
set forth in Section 1.2 of Exhibit A.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, (a) the Seller Parties agree to sell to the Buyer, and the Buyer
agrees to purchase from the Seller Parties all of such Seller Parties' right,
title and interest in the following assets and properties (all of which are
collectively referred to as the "Assets"):
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(a) Coastal Coal Assets. Coastal Coal's right, title and interest in the
following assets and properties (all of which are collectively referred to
as the "Coastal Coal Assets"):
(i) approximately 137,628 acres of surface and/or mineral estates
located in Wise, Dickenson, Russell, Scott, and ▇▇▇ Counties in
Virginia and Bell, Breathitt, Clay, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ and Pike Counties in Kentucky, and also certain
non-coal properties located in Bedford, Botetourt, Carroll,
Montgomery, Pulaski, Roanoke, Smyth, Tazewell, Washington and Wythe
Counties, Virginia; ▇▇▇▇ County, North Carolina; ▇▇▇▇▇▇ County,
Georgia; and Archer, Coleman, Montague, Witchita, Young and ▇▇▇▇
Counties, Texas (the "Coastal Coal Real Property");
(ii) all mineral and coal leases, surface leases, oil and gas agreements,
timber agreements, servitudes, easements, roads, rights of access,
ingress and egress and rights of way (collectively the "Coastal Coal
Easements") relating to or useful in connection with the Coastal
Coal Real Property and identified on Exhibit B;
(iii) all records in the possession of the Sellers pertaining directly to
the Coastal Coal Real Property or Coastal Coal Easements, including
maps, files reserve information and other similar materials
pertaining to such assets (the "Coastal Coal Records"); provided
that Coastal Coal will be given reasonable access to the Coastal
Coal Records as reasonably necessary to conduct coal mining
operations and related activities pursuant to the Lease Agreements;
and
(iv) the tangible assets contained within or associated with the Coastal
Coal land office at Hazard, Kentucky, including the office building,
furniture, furnishings, file cabinets, computers, printers,
vehicles, and related assets and the tangible assets contained
within or associated with the loading facility known as Esco Dock
located in Pike County, Kentucky (collectively the "Tangible
Assets").
The Coastal Coal Real Property, Coastal Coal Easements and the Tangible
Assets are more fully described in Exhibit B.
(b) Coastal Coal WV Assets. Coastal Coal WV's right, title and interest in the
following assets and properties (all of which are collectively referred to
as the "Coastal Coal WV Assets"):
(i) approximately 37,668 acres of surface and/or mineral estates located
in Preston and ▇▇▇▇▇▇ Counties in West Virginia (the "Coastal Coal
WV Real Property");
(ii) all mineral and coal leases, surface leases, oil and gas agreements,
timber agreements, servitudes, easements, roads, rights of access,
ingress and egress and rights of way (collectively the "Coastal Coal
WV Easements") relating to or useful in connection with the Coastal
Coal WV Real Property and identified on Exhibit B; and
(iii) all records in the possession of the Sellers pertaining directly to
the Coastal Coal Real Property or Coastal Coal Easements, including
maps, files, reserve information and other similar materials
pertaining to such assets (the "Coastal Coal WV Records"); provided
that Coastal Coal WV will be given reasonable access to the Coastal
Coal WV Records as reasonably necessary to conduct coal mining
operations and related activities pursuant to the Lease Agreements.
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The Coastal Coal WV Real Property and Coastal Coal WV Easements are more
fully described in Exhibit B.
(c) ANR WCDC Assets. ANR WCDC's right, title, and interest in the following
assets and properties (all of which are collectively referred to as the
"ANR WCDC Properties")
(i) the Overriding Royalty Contract; and
(ii) any maps, files, reserve information and other similar materials
pertaining to the Overriding Royalty Contract (the "ANR WCDC
Records").
For avoidance of doubt, the Assets shall not include any of the following: (a)
the inventories owned by Coastal Coal and Coastal Coal WV (including inventories
of extracted coal and other raw materials and supplies) that are located on or
are in transit to the Sites (although Buyer shall receive all royalty
attributable to such inventory, to the extent such coal is sold after the date
hereof), (b) preparation plants, buildings, infrastructure, machinery,
equipment, vehicles, furniture, supplies, replacement parts, tools and any other
tangible personal property that are located on or are in transit to the Sites,
(c) any leases, licenses, coal sale agreements, supply agreements, railroad
agreements and any other agreements or contracts not specifically listed in
Exhibit B to which the Seller Parties or their Affiliates are a party, whether
written or oral, (d) any governmental licenses or permits relating to the Assets
or the operation of the business of the Affiliates of the Sellers, and (e) any
accounts, accounts receivable, notes and notes receivable, reclamation and
performance bonds, deposit, pre-paid rentals and royalties, cash and cash
equivalents and other securities and instruments.
2.2 Purchase Price. In consideration for the sale of the Assets, the Buyer
agrees to pay to El Paso CGP (or its designee) at the Closing $69,000,000.00
(the "Purchase Price") payable by wire transfer of immediately available funds,
and such payment shall constitute the receipt by each of the Sellers of the
purchase price as allocated pursuant to Section 9.12 hereof.
2.3 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of El Paso CGP located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, commencing at 10:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated by this Agreement (other than conditions with respect to actions
each Party will take at the Closing itself), or such other date as the Buyer and
El Paso CGP may mutually determine (the "Closing Date").
2.4 Deliveries at the Closing. At the Closing, (a) the Seller Parties will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7.1(d), (b) the Buyer will deliver to the Sellers the
various certificates, instruments, and documents referred to in Section 7.2(d),
(c) Coastal Coal and Coastal Coal WV, respectively, will execute and deliver to
the Buyer one or more special warranty deeds substantially in the form attached
as Exhibit C that are necessary to convey (i) the Coastal Coal Real Property and
the Coastal Coal Easements and (ii) the Coastal Coal WV Real Property and the
Coastal Coal WV Easements, together with sales listing forms required by
applicable law, (d) ANR WCDC will execute and deliver to the Buyer and the Buyer
will execute and deliver to the Sellers the Assignment Agreement substantially
in the form attached as Exhibit D to transfer the Overriding Royalty Contract,
(e) Coastal Coal and Coastal Coal WV, respectively, will execute and deliver to
the Buyer and the Buyer will execute and deliver to the Sellers the Lease
Agreements substantially in the form attached as Exhibit E with regard to (i)
the lease of the Coastal Coal Real Property and such of the Coastal Coal
Easements as are set forth therein to Coastal Coal for the purpose of mining,
processing and transporting coal from such properties and (ii) the lease of the
Coastal Coal WV Real Property and such
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of the Coastal Coal WV Easements as are set forth therein to Coastal Coal WV for
the purpose of mining, processing and transporting coal from such properties,
(f) the Seller Parties will execute and deliver the Assignment Agreements
substantially in the form of Exhibit F, assigning those leases identified in
Exhibit B, (g) the Seller Parties will execute and deliver the ▇▇▇▇ of Sale,
substantially in the form of Exhibit G, transferring title to the Tangible
Assets and (h) the Buyer will pay the Purchase Price by wire transfer to El Paso
CGP (or its designees).
2.5 Assumed Liabilities. On the Closing Date, the Buyer will assume and
will be obligated to fully and timely pay, perform, and discharge in accordance
with their terms, only those liabilities specifically identified in Section 2.5
of the Disclosure Schedule (the "Assumed Liabilities").
2.6 Retained Assets and Liabilities. On the Closing Date, El Paso CGP or
its Affiliates shall retain and will be (a) obligated to fully and timely pay,
perform and discharge in accordance with their terms and (b) entitled to receive
any proceeds, recoveries (monetary or otherwise) and benefits, associated with
the matters specifically identified in Section 2.6 of the Disclosure Schedule
(the "Retained Assets and Liabilities"). On or prior to the Closing Date, to the
extent permitted and required, the Sellers shall cause the Retained Assets and
Liabilities to be assigned or otherwise transferred to El Paso CGP or its
Affiliates. To the extent that any of the Retained Assets and Liabilities cannot
be assigned or otherwise transferred to El Paso CGP or its designee prior to the
Closing Date (including where such an assignment or transfer would constitute a
breach or default under any agreement, encumbrance or commitment, would violate
any Law or would in any way adversely affect the rights or increase the
obligations of El Paso CGP or its designee), then the Buyer will execute and
deliver any other documents, certificates, agreements and other writings, and
take such other actions, in each case, as may be reasonably necessary, desirable
or requested by El Paso CGP in order to provide or impose upon El Paso CGP or
its designee the benefits and the obligations associated with such Retained
Assets and Liabilities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING
THE TRANSACTION
3.1 Representations and Warranties Concerning the Sellers. Except as set
forth in the Disclosure Schedule set forth in Exhibit H, the Sellers represent
and warrant to the Buyer as follows:
(a) Organization of the Sellers and Affiliates. Each of El Paso CGP
and ANR WCDC is a corporation, each of which is duly organized, validly
existing, and in good standing under the Laws of the state of Delaware. Each of
Coastal Coal and Coastal Coal WV is a limited liability company, each of which
is duly organized, validly existing, and in good standing under the Laws of the
state of Delaware. Each of the Sellers is duly qualified and in good standing to
do business in each jurisdiction in which the nature of the business conducted
by it or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to qualify would not have a material adverse
effect on the Sellers or their ability to consummate the transactions
contemplated by this Agreement. El Paso CGP, directly or through subsidiaries,
owns (i) all of the outstanding membership interests of Coastal Coal and Coastal
Coal WV and (ii) all of the issued and outstanding shares of ANR WCDC.
(b) Authorization of Transaction. Each of the Sellers has full power
and authority (including full company power and authority) to execute and
deliver this Agreement and to perform its obligations under this Agreement. This
Agreement constitutes the valid and legally binding obligation of each of the
Sellers enforceable in accordance with its terms and conditions, subject,
however, to the effects of bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors' rights
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generally, and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). None of the
Sellers need give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority in order to
consummate the transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental Authority to which any
of the Sellers is subject or any provision of their Organizational Documents or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which any of the Sellers is a party
or by which it is bound or to which any of its assets is subject, except for (x)
required consents to transfer and related provisions as set forth in Schedule
3.1(c) of the Disclosure Schedule, (y) any other third-party approvals or
consents contemplated in this Agreement; and (z) such violations, defaults,
breaches, or other occurrences that do not have a Material Adverse Effect on the
ability of any of the Sellers to consummate the transactions contemplated by
this Agreement.
(d) Brokers' Fees. Neither the Sellers nor their Affiliates have any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
the Buyer could become liable or obligated.
(e) Solvency. As of the date of this Agreement, and after
consummation of the transactions contemplated by this Agreement, none of the
Sellers are insolvent or unable to pay its debts or have made a general
assignment with or for the benefit of its creditors, and no proceeding under any
bankruptcy, insolvency or reorganization law has been commenced by or with
respect to any of the Sellers.
3.2 Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Sellers as follows:
(a) Organization of the Buyer. The Buyer is a limited liability
company duly organized, validly existing, and in good standing under the Laws of
the state of Delaware.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full company power and authority) to execute and deliver
this Agreement and to perform its obligations under this Agreement. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions, subject, however, to
the effects of bankruptcy, insolvency, reorganization, moratorium, or similar
Laws affecting creditors' rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Buyer need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any Governmental Authority
in order to consummate the transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental Authority to which the
Buyer is subject or any provision of its Organizational Documents or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any Party the right to
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accelerate, terminate, modify, or cancel, or require any notice, approval or
consent under any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject, except for such violations, defaults, breaches, or
other occurrences that do not, individually or in the aggregate, have a material
adverse effect on the ability of the Buyer to consummate the transactions
contemplated by this Agreement.
(d) Brokers' Fees. The Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Sellers or its
Affiliates could become liable or obligated.
(e) Financing. The Buyer has sufficient immediately available funds
to enable it to make payment of the Purchase Price at Closing without
encumbrance or delay and without causing the Buyer to become insolvent or to
declare insolvency. The Buyer expressly acknowledges that, in executing this
Agreement, the Sellers are relying on the Buyer's representation with regard to
the availability of the necessary funds for the payment of the Purchase Price
upon Closing and that there is no condition precedent under this Agreement with
regard to the Buyer's ability to obtain financing.
(f) Sellers' Breach of Representation or Warranty. To the Buyer's
Knowledge as of the date of this Agreement, there is no fact or circumstance
that would cause the Sellers to be in breach of any representation or warranty
set forth in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING
THE ASSETS
4.1 Representations and Warranties Concerning the Assets. Except as set
forth in the Disclosure Schedule set forth in Exhibit G, the Sellers represent
and warrant to the Buyer as follows:
(a) Title to the Real Property. To the Sellers' Knowledge, the
Assets are free and clear of all Encumbrances, except for (i) Permitted
Encumbrances, (ii) the Encumbrances disclosed in the Disclosure Schedule and
(iii) Encumbrances which do not have a Material Adverse Effect. The Sellers have
delivered or made available to the Buyer all material title reports, title
insurance policies, title commitments, title opinions and title abstracts
relating to the Coastal Coal Real Property and Easements and the Coastal Coal WV
Real Property and Easements (the "Title Information") which are in the
possession and control of the Sellers. To Sellers' Knowledge, all Title
Information is true and accurate except to the extent such inaccuracy would not
have a Material Adverse Effect or as set forth in the Disclosure Schedule.
(b) No Adverse Claims. To the Sellers' Knowledge, there are no
adverse claims to any of the Coastal Coal Real Property and Easements or the
Coastal Coal WV Real Property and Easements, except for (i) Permitted
Encumbrances, (ii) those claims which would not have a Material Adverse Effect,
and (iii) those claims disclosed in the Disclosure Schedule. There are no
eminent domain, zoning or condemnation proceedings pending, or to the Sellers'
Knowledge, threatened against any of (i) the Coastal Coal Real Property or
Easements or (ii) the Coastal Coal WV Real Property or Easements, except such
proceedings that would not have a Material Adverse Effect.
(c) Contracts and Commitments. The Overriding Royalty Contract is in
full force and effect, except where the failure to be in full force and effect
would not have a Material Adverse Effect. To the Sellers' Knowledge, ANR WCDC
has performed all material obligations required to be performed by it to date
under the Overriding Royalty Contract, and is not in default under any material
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obligation of such contracts, except when such default would not have a Material
Adverse Effect. To the Sellers' Knowledge, the Outleases are in full force and
effect and each party thereto has performed all material obligations required to
be performed by it under such Outleases, and is not in default under any
material obligation of such Outleases, except when such default would not have a
Material Adverse Effect.
(d) Material Change. To the Sellers' Knowledge, since October 1,
2002 there has been no Material Adverse Effect.
(e) Tax Matters. Except as would not have a Material Adverse Effect:
(i) There is no dispute or claim concerning any Tax liability
with respect to the Assets claimed or raised by any authority in writing.
(ii) There are no outstanding agreements or waivers extending
the statutory period of limitations applicable to any Tax Returns required to be
filed by or with respect to the Assets and for which the Buyer may be
responsible.
(iii) Each of the Seller's Affiliates has filed all Tax
Returns with respect to the Assets that it was required to file and such Tax
Returns (with respect to the Assets) are accurate in all respects. All Taxes
shown as due with respect to the Assets on any such Tax Returns have been paid.
(iv) To Sellers' Knowledge, no special assessments for
improvements are outstanding or have been completed as of the date of this
Agreement.
(f) Litigation. Section 4.1(f) of the Disclosure Schedule sets forth
each instance in which any of the Assets (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is the subject of
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction, or is the subject of any pending or, to the Sellers'
Knowledge, threatened claim, demand, or notice of violation or liability from
any Person, except where any of the foregoing would not have a Material Adverse
Effect.
(g) Environmental Matters. To the Sellers' Knowledge:
(i) With respect to the Assets, each of Coastal Coal and
Coastal Coal WV is in compliance with all applicable federal, state and local
Laws (including common law) relating to the protection of the environment as in
effect on or before the date of this Agreement, including, without limitation,
the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. section 1201
et seq., the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended, 42 U.S.C. section 9601, et seq. ("CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. section
6901, et seq., the Clean Air Act, as amended, 42 U.S.C. section 7401, et seq.,
the Federal Water Pollution Control Act, as amended, 33 U.S.C. section 1251, et
seq., and the Oil Pollution Act of 1990, 33 U.S.C. section 2701, et seq. and the
statutes, regulations, rules and orders of all agencies responsible for
supervision and enforcement of environmental and mining laws of Kentucky,
Virginia and West Virginia (collectively, the "Environmental Laws" and
individually an "Environmental Law"), except as set forth in Section 4.1(g) of
the Disclosure Schedule, and except for such instances of noncompliance that do
not have a Material Adverse Effect.
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(ii) Each of Coastal Coal and Coastal Coal WV, with respect to
the Assets, has obtained all permits, licenses, franchises, authorities,
consents, and approvals, and has made all filings and maintained all material
information, documentation, and records, as necessary under applicable
Environmental Laws for operating its assets and business as it is presently
conducted, and all such permits, licenses, franchises, authorities, consents,
approvals, and filings remain in full force and effect, except as set forth in
Section 4.1(g) of the Disclosure Schedule, and except for such matters that do
not have a Material Adverse Effect.
(iii) Except as set forth in Section 4.1(g) of the Disclosure
Schedule, and except as does not have a Material Adverse Effect, (A) there are
no pending or, to the Sellers' Knowledge, threatened claims, demands, actions,
administrative proceedings or lawsuits against either of Coastal Coal or Coastal
Coal WV, with respect to the Assets under any Environmental Laws and none of the
Sellers has any Knowledge (without any obligation of due inquiry) of facts which
would give rise to the same and (B) none of the Assets are, subject to any
outstanding injunction, judgment, order, decree or ruling, under any
Environmental Laws.
(iv) None of the Sellers has received any written notice that
either Coastal Coal or Coastal Coal WV, with respect to the Assets, is or may be
a potentially responsible party under CERCLA or any analogous state law in
connection with any site actually or allegedly containing or used for the
treatment, storage or disposal of Hazardous Substances.
None of the Sellers makes any representation or warranty relating to any
Environmental Law, except as expressly set forth in this Section 4.1(g).
Notwithstanding anything to the contrary in this Section 4.1(g), none of the
Sellers makes any representation or warranty in this Section 4.1(g) with respect
to the lands associated with the Overriding Royalty Contract.
(h) Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental Authority to which any
Asset or the Sellers are subject or (ii) to the Sellers' Knowledge, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice or trigger any rights to payment or other
compensation under any agreement, contract, lease, license, instrument, or other
arrangement to which any Asset is subject, except for (xx) required consents to
transfer and related provisions and any other third party appraisals or consents
contemplated in this Agreement or (yy) where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, right to payment or other compensation, or Encumbrance would not have a
Material Adverse Effect, or would not materially adversely affect the ability of
the Sellers to consummate the transactions contemplated by this Agreement. None
of the Sellers needs to give notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority in order for
the Parties to consummate the transactions contemplated by this Agreement,
except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a Material Adverse Effect or
would not materially adversely affect the ability of the Sellers to consummate
the transactions contemplated by this Agreement.
4.2 Limitations of Representations and Warranties. The following
limitations apply with regard to any representations and warranties by the
Sellers:
(a) The Buyer acknowledges that (i) it has had and pursuant to this
Agreement will have before Closing access to the Sellers, the Assets, and the
officers and employees of the Sellers and
8
(ii) in making the decision to enter into this Agreement and consummate the
transactions contemplated hereby, the Buyer has relied solely on the basis of
its own independent investigation and upon the express representations,
warranties, covenants, and agreements set forth in this Agreement. Without
limiting the above, Buyer has, prior to the execution and delivery of this
Agreement, (i) reviewed the environmental site assessments of some of the
Coastal Coal and Coastal Coal WV Real Property (the "Real Property") that were
provided to the Buyer and are more fully described in Section 4.2 of the
Sellers' Disclosure Schedule, (ii) had full opportunity to conduct to its
satisfaction inspections of the Real Property, and (iii) fully completed all
inspections of the Real Property. Buyer acknowledges, after such review and
inspections, that no further investigation of the Real Property is necessary for
purposes of acquiring the Assets for Buyer's intended use. THE BUYER
ACKNOWLEDGES THAT THERE ARE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.
(b) WITHOUT LIMITING THE ABOVE, NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, THE SELLERS MAKE NO AND DISCLAIM ANY REPRESENTATION
OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND WHETHER BY COMMON LAW, STATUTE, OR
OTHERWISE REGARDING ALL GEOLOGICAL DATA, RESERVE OR RESOURCE DATA, SUFFICIENCY
OF MINING RIGHTS (EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.1(a) ABOVE),
PROCESSING CAPABILITIES OF THE ASSETS, MINEABILITY OF COAL, QUALITY OF COAL
RESERVES AND INVENTORIES. THE ACREAGES OF THE COASTAL COAL REAL PROPERTY AND THE
COASTAL COAL WV REAL PROPERTY SET FORTH IN THIS AGREEMENT ARE APPROXIMATIONS AND
ANY REPRESENTATION OR WARRANTY WITH RESPECT THERETO IS DISCLAIMED.
ARTICLE V
PRE-CLOSING COVENANTS
5.1 Satisfaction of Conditions Precedent. From the date of this Agreement
until the earlier of the Closing Date or the termination of this Agreement, each
Party will use all commercially reasonable efforts to take all action and to do
all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement, including without
limitation the satisfaction of the conditions precedent set forth in Article
VII. Without limiting the generality of the foregoing, the Buyer and the Sellers
agree to cooperate to take all commercially reasonable actions to satisfy the
conditions precedent and consummate the transactions contemplated under this
Agreement not later than December 31, 2002.
5.2 Notices and Consents. From the date of this Agreement until the
earlier of the Closing Date or the termination of this Agreement, the Sellers
will give any notices to third parties, and will use its commercially reasonable
efforts to obtain the third party consents, listed on Section 5.2 of the
Disclosure Schedule. Each of the Parties will give any notices to, make any
filings with, and use all commercially reasonable efforts to obtain any
authorizations, consents, and approvals of Governmental Authorities.
5.3 Operation of Business. From the date of this Agreement until the
earlier of the Closing Date or the termination of this Agreement, the Sellers
will not, without the consent of the Buyer (which consent shall not be
unreasonably withheld or delayed), except as expressly contemplated by this
Agreement or Section 5.3 of the Disclosure Schedule, engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Sellers will
not, without the consent of the Buyer (which consent shall not be unreasonably
9
withheld, delayed or conditioned), except as expressly contemplated by this
Agreement or as set forth in Section 5.3 of the Disclosure Schedule, do any of
the following:
(a) cause or allow any of the Assets to become subject to an
Encumbrance, except for Permitted Encumbrances and other Encumbrances identified
in Section 5.3(a) of the Disclosure Schedule; or
(b) except in the Ordinary Course of Business, amend in any material
respect, or terminate the Overriding Royalty Contract or any material agreement,
contract, lease, license or other instrument affecting or related to the Coastal
Coal Assets or the Coastal Coal WV Assets before the expiration of the term
thereof, other than to the extent the Overriding Royalty Contract or any of them
terminate or are terminable pursuant to their respective terms in the Ordinary
Course of Business.
Notwithstanding anything to the contrary above, El Paso CGP shall have the
right to negotiate and enter into agreements with third parties to purchase the
equity interests in Coastal Coal, Coastal Coal WV and other Affiliates of the
Sellers at any time during the term of this Agreement.
5.4 Access to Information. The Sellers will permit representatives of the
Buyer to have reasonable access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of Coastal Coal, Coastal
Coal WV and ANR WCDC to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or pertaining to the
Assets. Any information obtained by the Buyer, its employees, representatives,
consultants, attorneys, agents, lenders and other advisors under this Section
5.4 shall be subject to the confidentiality and use restrictions contained in
the Confidentiality Agreement. All "due diligence" activities of the Buyer shall
be conducted in accordance with applicable Laws and the Buyer shall indemnify
the Sellers and their Affiliates from and against all damages, losses and
liabilities incurred as a result of such activities. During the period prior to
Closing, in no event shall Buyer or its Affiliates or their respective officers,
directors, employees, counsel, financial advisors or other representatives be
permitted to conduct Phase II environmental assessments or any other sampling or
testing of soil and/or ground or surface water at, or under, any real property
associated with the Subject Assets, without the prior written consent of the
Sellers, which consent shall not be unreasonably withheld or delayed.
5.5 Contact with Lessees, Customers and Vendors. The Buyer shall not,
prior to the Closing Date, contact any lessee, customer, vendor, supplier or
employee of, or any other Person having business dealings with, Sellers or their
Affiliates with respect to any aspect of the Assets or the transactions
contemplated hereby, without the prior consent of the Sellers, which consent
shall not be unreasonably withheld or delayed.
5.6 Amendment of Schedules. Each Party agrees that, with respect to the
representations and warranties of such Party contained in this Agreement, such
Party shall have the continuing obligation until the Closing to supplement or
amend the Disclosure Schedules applicable to that Party with respect to any
matter hereafter arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or described in the
Disclosure Schedules. For the purposes of determining whether the conditions set
forth in Article VII have been fulfilled, the Disclosure Schedules shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude all information contained in any
supplement or amendment thereto. However, if the Closing shall occur, then all
matters disclosed pursuant to any such supplement or amendment at or prior to
the Closing shall be deemed included in the Disclosure Schedule and no Party
shall be entitled to make a claim for indemnification under this Agreement with
regard to such
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supplemental information based on the absence of any such supplemental
information in the Disclosure Schedule as of the date of this Agreement,
pursuant to the terms of this Agreement.
5.7 Financial Statements. As soon as practicable following the date
of this Agreement, the Sellers and the Buyer will cooperate in communicating
with the Securities and Exchange Commission ("SEC") to determine the form and
the periods of the audited financial statements and unaudited interim financial
statements acceptable to the SEC to be filed by the Buyer in its Form 8-K and
related amendment thereto regarding the purchase of the Assets. As soon as
practicable following the date of this Agreement, (i) the Sellers shall provide
financial statements and footnotes to the Buyer and its auditors and (ii) upon
receipt of such financial statements and footnotes from the Seller, the Buyer
will cause its auditors to commence an audit of the applicable financial
statements. Upon receiving the response from the SEC detailing the form and the
periods of such financial statements, the Seller shall provide financial
statements and footnotes in the form agreed-upon by the SEC to the Buyer and its
auditors. The Sellers shall cooperate fully with the Buyer and its auditors in
completing the required audit(s) of annual periods and review(s) of interim
periods in a timely manner, allowing the Buyer to file the required Form 8-K and
8-K amendment(s) in accordance with Regulation S-K and S-X. The audit(s) and
interim period review(s) shall be completed prior to the Closing Date. The fees
and costs of audit(s) and interim period review(s) shall be borne by the Buyer.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as the other Parties reasonably may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Article VIII).
6.2 Delivery and Retention of Records. On or before sixty (60) days after
the Closing Date, at the Buyer's request, the Sellers will deliver or cause to
be delivered to the Buyer at its office in Huntington, West Virginia or Hazard,
Kentucky, or such other mutually agreeable location, all files, records,
information and data relating to the Coastal Coal Records, the Coastal Coal WV
Records and the ANR WCDC Records (collectively, the "Records"). Each of the
Sellers (and their successors and assigns) may retain a copy of the Records to
the extent that they relate to the operation of their businesses. The Buyer
agrees to (a) hold the Records and not to destroy or dispose of any portion
thereof for a period of ten years from the Closing Date or such longer time as
may be required by Law, provided that, if it desires to destroy or dispose of
such Records during such period, it will first offer in writing at least sixty
(60) days before such destruction or disposition to surrender them to the
Sellers and if the Sellers do not accept such offer within twenty (20) days
after receipt of such offer, the Buyer may take such action and (b) following
the Closing Date to afford (i) the Sellers, (ii) the Sellers' successors and
assigns and (iii) any of their accountants, and counsel, during normal business
hours, upon reasonable request, at any time, full access to the Records and to
the Buyer's employees at no cost to the Sellers (other than for reasonable
out-of-pocket expenses); provided that such access will not be construed to
require the disclosure of Records that would cause the waiver of any
attorney-client, work product or like privilege; provided, further, that in the
event of any litigation nothing herein shall limit any Party's rights of
discovery under applicable Law. Nothing herein shall impose any liability upon
Buyer in the event of destruction or loss of any Records as a result of
casualty. The Buyer agrees to provide the Sellers and their successors and
assigns to the interests in Coastal Coal, Coastal Coal WV and their Affiliates
involved in the coal mining business reasonable access to the Records after the
Closing Date in order for
11
Sellers to comply with their obligations under this Agreement (including without
limitation, the preparation of the Closing Date Statement, the preparation of
any required tax returns in accordance with this Agreement and to comply with
any indemnity obligations), to conduct any historical audit of the financial
statements of Coastal Coal and Coastal Coal WV in accordance with generally
accepted accounting principles and in accordance with Regulation S-X of the
Securities and Exchange Commission and, to the extent required, to perform any
obligations or to receive any benefits associated with the Retained Assets and
Liabilities. The Sellers agree (and shall bind its successors and assigns) to
keep the terms and conditions of the Outleases confidential; provided that the
Sellers shall not be obligated to keep such terms and conditions confidential to
the extent that they are already in possession of the public or becomes
available to the public other than through the act or omission of the Sellers in
breach hereof.
6.3 Employee Matters. As of the Closing Date, the employees listed on
Section 6.3 of the Disclosure Schedule as of the Closing (the "Current
Employees") shall be offered employment with the Buyer or its Affiliates in the
same positions, at the same level of wages and/or salary, and at a work location
which is within 50 miles of their work location immediately prior to the Closing
Date; provided, however, except as may be specifically required by applicable
Law or any contract, neither the Buyer nor its Affiliates, on the one hand, nor
any employee, on the other hand, shall be obligated to continue any employment
relationship or any specific terms of employment for any specific period of
time. As of the Closing Date, all Current Employees shall cease active
participation in all employee benefit plans and arrangements of the Sellers and
their Affiliates. As of the first day following the Closing Date, all Current
Employees shall be permitted to participate in the employee benefits plans and
arrangements of the Buyer and its Affiliates on the same terms as similarly
situated employees of the Buyer or any of its Affiliates. To the extent any
employee benefit plan, program or policy of the Buyer or their Affiliates is
made available to the Current Employees immediately prior to the Closing Date
with respect to any welfare benefit plans to which such employees may become
eligible, the Buyer or its Affiliates shall cause such plans to provide credit
for any co-payments or deductibles by such employees and waive all pre-existing
condition exclusions and waiting periods, other than limitations or waiting
periods that have not been satisfied under any welfare plans maintained by the
Seller and its Affiliates for their employees prior the Closing Date.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) the representations and warranties of the Sellers contained in
Section 3.1 and Article IV shall be true and correct when made and as of the
Closing Date (other than representations and warranties that are made as of a
specific date which shall have been true and correct as of such date), except to
the extent that any failures of such representations and warranties to be so
true and correct would not have a Material Adverse Effect; provided, however,
that if any representation and warranty of the Sellers is determined to be
untrue or incorrect prior to the Closing Date and such failure of such
representation and warranty to be so true and correct would have a Material
Adverse Effect, then the Buyer shall notify the Sellers upon such determination,
and the Sellers shall have the right, but not the obligation, to cure such
failure on or before the Closing Date, in which case, if cured, such failure
shall be deemed to have been waived;
12
(b) the Sellers shall have performed and complied with all of its
covenants hereunder through the Closing except to the extent that any failure to
perform or comply would not have a Material Adverse Effect;
(c) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(d) the Sellers shall have delivered to the Buyer an officer's
certificate to the effect that each of the conditions specified in subsections
7.1(a)-(c) is satisfied in all respects;
(e) any governmental approvals required to consummate the
transactions contemplated by this Agreement shall have been received;
(f) the Buyer shall have either (i) completed the audit requirements
with respect to the Assets in accordance with the SEC Requirements as set forth
in Section 5.7(b) or (ii) shall have reasonably determined that, based upon its
review of the Sellers' accounting records, the SEC Requirements will be capable
of being completed in a reasonable period of time; and
(g) the Sellers shall have delivered to the Buyer an opinion of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President and Deputy General Counsel of El Paso
(relying to the extent deemed necessary by such counsel on the opinion of
Delaware counsel), or other counsel to the Sellers that is reasonably acceptable
to the Buyer, substantially in the form attached as Exhibit I.
The Buyer may waive any condition specified in this Section 7.1 if it executes a
writing so stating at or before the Closing.
7.2 Conditions to Obligation of the Sellers. The obligation of the Sellers
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties of the Buyer contained in
Section 3.2 shall be true and correct when made and as of the Closing Date
(other than representations and warranties that are made as of a specific date
which shall have been true and correct as of such date), except to the extent
that any failures of such representations and warranties to be so true and
correct would not have a material adverse effect on the Sellers; provided,
however, that if any representation and warranty of the Buyer is determined to
be untrue or incorrect prior to the Closing Date and such failure of such
representation and warranty to be so true and correct would have a material
adverse effect, then Sellers shall notify Buyer upon such determination, and
Buyer shall have the right, but not the obligation, to cure such failure on or
before the Closing Date, in which case, if cured, such failure shall be deemed
to have been waived;
(b) the Buyer shall have performed and complied with all of its
covenants hereunder through the Closing except to the extent any failure to
perform or comply would not have a material adverse effect on the Sellers;
(c) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(d) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified in subsections 7.2(a)-(c) is
satisfied in all respects;
13
(e) any governmental approvals required to consummate the
transactions contemplated by this Agreement shall have been received;
(f) all third party consents required to effectuate the transaction
under this Agreement have been received by the Sellers on terms acceptable to
it, in its sole discretion; and
(g) the Buyer shall have delivered to the Sellers an opinion of the
law firm of Huddleston, Bolen, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP (relying to the extent
deemed necessary by such counsel on the opinion of Delaware counsel), or other
counsel to the Buyer that is reasonably acceptable to the Seller, substantially
in the form attached as Exhibit I.
The Sellers may waive any condition specified in this Section 7.2 if it executes
a writing so stating at or before the Closing.
ARTICLE VIII
REMEDIES FOR BREACHES OF AGREEMENT
8.1 Survival of Representations, Warranties and Certain Covenants. (i) All
of the representations and warranties of the Sellers contained in Articles III
and IV and in any documentation or certificates delivered pursuant to Section
7.1(d) or as described in Section 2.1 shall survive the Closing under this
Agreement for a period of two years after the Closing Date; (ii) the
representations and warranties in Section 4.1(e) shall survive the Closing with
respect to any given claim that would constitute a breach of such representation
or warranty until the earlier of four (4) years from the Closing Date or the
expiration of the statute of limitations applicable to the underlying Tax matter
giving rise to that claim; and (iii) the representations and warranties in
Section 4.1(g) shall survive the Closing under this Agreement for a period of
three years after the Closing Date. The representations and warranties of the
Buyer contained in Section 3.2 shall survive the Closing for a period of two
years after the Closing Date. The covenants contained in this Agreement to be
performed after the Closing shall survive the Closing indefinitely.
8.2 Indemnification Provisions for Benefit of the Buyer.
(a) El Paso CGP shall indemnify and hold Buyer harmless from and
against any and all Adverse Consequences whatsoever arising out of or resulting
from:
(i) Any breach of warranty or misrepresentation by the Sellers
or the nonperformance of any covenant or obligation to be performed by the
Sellers to the extent that and only to the extent that (A) there is an
applicable survival period pursuant to Section 8.1; and that (B) the Buyer makes
a written claim for indemnification against the Sellers pursuant to Section 11.6
within such survival period;
(ii) Any liability arising out of the ownership, conduct or
operation of the Assets prior to the Closing Date (other than the Assumed
Liabilities) to the extent that the Buyer makes a written claim for
indemnification against the Sellers pursuant to Section 11.6 within five years
of the Closing Date;
(iii) Any claim which may be asserted against the Buyer or any
of the Assets, by any of the Sellers' employees, independent contractors, their
employees, or agents with respect to liabilities incurred by or on the Sellers'
behalf prior to the Closing Date, whether covered by a collective bargaining
agreement or not, including labor costs, severance pay, pension benefits,
employee benefits,
14
workers' compensation, vacation and holiday benefits, sick pay, multiemployer
withdrawal liability, any and all employee benefits, and any other costs
associated therewith;
(iv) Any attempt (whether or not successful) by any person to
cause or require Buyer to pay or discharge any debt, obligation or liability
relating to the Sellers not associated with the Assets or an Assumed Liability.
(b) Limitations of Indemnification. The following limitations shall
apply with regard to the Sellers' obligations to indemnify the Buyer Indemnitees
pursuant to this Section 8.2:
(i) The Sellers' and their Affiliates' liability under this
Agreement shall not exceed 25% of the Purchase Price paid in accordance with
Section 2.2. The limitations on Sellers' indemnification obligations set forth
in the prior sentence shall not apply to losses resulting from fraud or willful
misconduct by the Sellers.
(ii) The Sellers and their Affiliates will have no liability
for any Adverse Consequences, unless and until the aggregate Adverse
Consequences for which the Buyer Indemnitees are entitled to recover under this
Agreement exceeds 1% of the Purchase Price paid in accordance with Section 2.2
(the "Threshold Amount"); provided, however, once such amount exceeds the
Threshold Amount, the Buyer Indemnitees will be entitled to recover all amounts
to which they are entitled in excess of the Threshold Amount, subject to the
limitations set forth in (i) above.
(iii) The Sellers and their Affiliates shall not be liable to
the Buyer Indemnitees for any Adverse Consequences associated with a claim that
is based upon any fact, matter or circumstance within the actual knowledge of
the Buyer, the Buyer Indemnitees and their Affiliates as of the date hereof, as
well as such facts, matters or circumstances which before the Closing Date had
been communicated to the Buyer, the Buyer Indemnitees or their Affiliates in
writing.
(iv) The Buyer acknowledges and agrees that the
indemnification provisions in this Article VIII and the termination rights in
Section 10.1 shall be the exclusive remedies of the Buyer, the Buyer Indemnitees
and their Affiliates with respect to the transactions contemplated by this
Agreement. Furthermore, the Buyer waives any right to assert any claim or
otherwise hold any of the Sellers, other than El Paso CGP, liable for or
responsible for any indemnification of the Buyer Indemnitees and their
Affiliates under this Agreement, with it being acknowledged that only El Paso
CGP shall be liable for or responsible for indemnifying the Buyer Indemnitees
and their Affiliates under this Agreement.
8.3 Indemnification Provisions for Benefit of the Sellers. The Buyer shall
indemnify and hold the Sellers forever harmless from and against all Adverse
Consequences whatsoever arising out of or resulting from:
(a) Any breach of warranty or misrepresentation by the Buyer
contained herein, or the non-performance of any covenant or obligation to be
performed by the Buyer to the extent that and only to the extent that (A) there
is an applicable survival period pursuant to Section 8.1; and that (B) the
Sellers make a written claim for indemnification against the Buyer pursuant to
Section 11.6 within such survival period; or
(b) The ownership, conduct or operation of the Assets from and after
the Closing Date and any Assumed Liability.
15
8.4 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") that may give rise to
a right to claim for indemnification against any other Party (the "Indemnifying
Party") under Section 8.2 or Section 8.3, then the Indemnified Party shall
promptly (and in any event within five business days after receiving notice of
the Third Party Claim) notify the Indemnifying Party thereof in writing.
(b) The Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party; provided, however, that
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably)
unless the judgment or proposed settlement involves only the payment of money
damages and does not impose an injunction or other equitable relief upon the
Indemnified Party.
(c) Unless and until the Indemnifying Party assumes the defense of
the Third Party Claim as provided in subsection 8.4(b), the Indemnified Party
may defend against the Third Party Claim in any manner it reasonably may deem
appropriate.
(d) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party which consent shall
not be withheld unreasonably.
8.5 Determination of Amount of Adverse Consequences. The Adverse
Consequences giving rise to any indemnification obligation hereunder shall be
limited to the actual loss suffered by the Indemnified Party (i.e., reduced by
any insurance proceeds or other payment or recoupment received, realized or
retained by the Indemnified Party as a result of the events giving rise to the
claim for indemnification), net of any reduction in Taxes of the Indemnified
Party (or the affiliated group of which it is a member) occasioned by such loss
or damage. The amount of the actual loss and the amount of the indemnity payment
shall be computed by taking into account the timing of the loss or payment, as
applicable, using a 10% interest or discount rate, as appropriate. Upon the
request of the Indemnifying Party, the Indemnified Party shall provide the
Indemnifying Party with information sufficient to allow the Indemnifying Party
to calculate the amount of the indemnity payment in accordance with this Section
8.5. An Indemnified Party shall take all reasonable steps to mitigate damages in
respect of any claim for which it is seeking indemnification and shall use
reasonable efforts to avoid any costs or expenses associated with such claim
and, if such costs and expenses cannot be avoided, to minimize the amount
thereof.
8.6 Tax Treatment of Indemnity Payments. All indemnification payments made
under this Agreement, including any payment made under Article VIII, shall be
treated as purchase price adjustments for Tax purposes.
ARTICLE IX
TAX MATTERS
9.1 Post-Closing Tax Returns. The Buyer shall prepare or cause to be
prepared and file or cause to be filed any Post-Closing Tax Returns with respect
to the Assets. The Buyer shall pay (or shall cause to be paid) any Taxes due
with respect to such Tax Returns.
16
9.2 Pre-Closing Tax Returns. The Sellers shall prepare or cause to be
prepared and file or cause to be filed all Pre-Closing Tax Returns with respect
to the Assets. The Sellers shall pay (or cause to be paid) any Taxes due with
respect to such Tax Returns.
9.3 Prorated Ad Valorem ▇▇▇▇▇.▇▇ valorem real property taxes on the Assets
shall be prorated and adjusted on the basis of the actual days in the fiscal
year, the Sellers to have the last day, to and including the date of Closing.
Taxes for all prior years shall be paid by the Sellers. If the Closing shall
occur before the tax rate is fixed for the then current fiscal year, the
apportionment of taxes shall be upon the basis of the tax rate for the preceding
year applied to the latest assessed valuation. General assessments, whether
matured or unmatured, shall be paid in full by the Sellers. All other
assessments shall be paid by the Buyer. It is acknowledged by the Parties that
the Buyer is purchasing certain real property (the Coastal Coal and Coastal Coal
WV Real Property being collectively for purposes of this section the "Real
Property") exclusive of the buildings and improvements thereon which will be
retained by the Sellers (the "Retained Property") and which will thereafter be
subject to assessment for taxation as personal property or as part of the
leasehold estate being created under the Lease Agreements and that the County
Assessor (or other appropriate assessing official) of the Counties in the
jurisdictions in which the real estate is located may not separately assess the
Real Property from the Retained Property until the applicable next assessment
date (being July 1st in West Virginia) following the Closing Date. Accordingly,
there will be at least one year during which the Real Property may be assessed
together with the Sellers's Retained Property. For example, if the Closing is in
October of 2002, the Real Property and Retained Property may not be separately
assessed until July 1, 2003 (for tax year 2004). As a result the taxes for the
year 2003 on the Real Property would be combined with the taxes on the Retained
Property. If the Real Property and the Retained Property are not separately
assessed, then the Buyer shall submit to the Sellers a statement for the
Sellers's pro rata share of such taxes calculated by prorating the amount of
taxes for land with respect to other real property composing the tax parcel of
which the Real Property is a part and determining the portion of the taxes
applicable to the Retained Property based upon its relative value. The Sellers
shall give to the Buyer after the Sellers's receipt of the Buyer's statement
therefor and at least fifteen (15) days prior to the date payable without
interest or penalty, a check payable to the appropriate County Treasurer for the
amount specified in the statement or, upon delivery of a paid receipt evidencing
prior payment by the Buyer to any such County Treasurer of such sums as are due,
the Sellers shall reimburse the Buyer for the amount specified.
9.4 Claims for Refund. The Buyer shall not file any claim for refund of
taxes with respect to the Assets for whole or partial taxable periods on or
before the Closing Date.
9.5 Cooperation on Tax Matters.
(a) The Buyer and the Sellers shall cooperate fully, as and to the
extent reasonably requested by the other parties, in connection with the filing
of Tax Returns pursuant to this Section and any audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Buyer and the Sellers shall (i) retain all books and records with
respect to Tax matters pertinent to the Assets relating to any whole or partial
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by the Buyer or any Sellers,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii)
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
the Buyer or any Sellers, as the case may be, shall allow the other party to
take possession of such books and records.
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(b) The Buyer and the Sellers further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
9.6 Certain Taxes. The Sellers will file all necessary Tax Returns and
other documentation with respect to all transfer (including without limitation,
stock transfer), recording, documentary, sales, use, stamp, registration and
other Taxes and fees, and, if required by applicable Law, the Buyer will, and
will cause its Affiliates to, join in the execution of any such Tax Returns and
other documentation. Notwithstanding anything set forth in this Agreement to the
contrary, the Buyer will be obligated to bear and shall pay at Closing, any
transfer, documentary, sales, recording, use, stamp, registration and other
Taxes and fees incurred in connection with this Agreement and the transactions
contemplated under this Agreement. The Buyer agrees to indemnify, defend and
hold the Sellers harmless for all such taxes and fees.
9.7 Confidentiality. Any information shared in connection with Taxes shall
be kept confidential, except as may otherwise be necessary in connection with
the filing of Tax Returns or reports, refund claims, tax audits, tax claims and
tax litigation, or as required by Law.
9.8 Audits. The Sellers and the Buyer shall provide prompt written notice
to the others of any pending or threatened tax audit, assessment or proceeding
that it becomes aware of related to the Assets for whole or partial periods for
which it may be indemnified by the other party hereunder. Such notice shall
contain factual information (to the extent known) describing the asserted tax
liability in reasonable detail and shall be accompanied by copies of any notice
or other document received from or with any tax authority in respect of any such
matters. If an indemnified party has knowledge of an asserted tax liability with
respect to a matter for which it may be indemnified hereunder and such party
fails to give the indemnifying party prompt notice of such asserted tax
liability, then (a) if the indemnifying party is precluded by the failure to
give prompt notice from contesting the asserted tax liability in any forum, the
indemnifying party shall have no obligation to indemnify the indemnified party
for any Taxes arising out of such asserted tax liability, and (b) if the
indemnifying party is not so precluded from contesting, but such failure to give
prompt notice results in a detriment to the indemnifying party, then any amount
which the indemnifying party is otherwise required to pay the indemnified party
pursuant to this Section shall be reduced by the amount of such detriment,
provided, the indemnified party shall nevertheless be entitled to full
indemnification hereunder to the extent, and only to the extent, that such party
can establish that the indemnifying party was not prejudiced by such failure.
Section 9.10 shall control the procedure for Tax indemnification matters to the
extent it is inconsistent with any other provision of this Agreement.
9.9 Control of Proceedings. The party responsible for the Tax under this
Agreement shall control audits and disputes related to such Taxes (including
action taken to pay, compromise or settle such Taxes). Reasonable out of pocket
expenses with respect to such contests shall be borne by the Sellers and the
Buyer in proportion to their responsibility for such Taxes as set forth in this
Agreement. Except as otherwise provided by this Agreement, the noncontrolling
party shall be afforded a reasonable opportunity to participate in such
proceedings at its own expense.
9.10 Powers of Attorney. The Buyer shall provide the Sellers and their
Affiliates with such powers of attorney or other authorizing documentation as
are reasonably necessary to empower them to execute and file returns they are
responsible for hereunder, file refund and equivalent claims for Taxes they are
responsible for, and contest, settle, and resolve any audits and disputes that
they have control over under Section 9.8 (including any refund claims which turn
into audits or disputes).
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9.11 Remittance of Refunds. If the Buyer or any Affiliate of the Buyer
receives a refund of any Taxes attributable to a Pre-Closing Tax Period that the
Sellers is responsible for hereunder, or if the Sellers or any Affiliate of the
Sellers receives a refund of any Taxes attributable to a Post-Closing Tax Period
that the Buyer is responsible for hereunder, the party receiving such refund
shall, within thirty days after receipt of such refund, remit it to the party
who has responsibility for such Taxes hereunder. For the purpose of this Section
9.11, the term "refund" shall include a reduction in Tax and the use of an
overpayment as a credit or other tax offset, and receipt of a refund shall occur
upon the filing of a return or an adjustment thereto using such reduction,
overpayment or offset or upon the receipt of cash.
9.12 Purchase Price Allocation. Within thirty (30) days of the date of
this Agreement and in any event prior to Closing, the Sellers and the Buyer
shall attempt to agree upon the allocation of the Purchase Price among the
Assets for all purposes (including Tax and financial accounting purposes). The
Buyer, the Sellers and their applicable Affiliates will file all Tax Returns
(including amended Tax Returns and claims for refund) and information reports in
a manner consistent with such agreed upon allocation.
9.13 Closing Tax Certificate. At the Closing, the Sellers shall deliver,
or cause each of its selling Affiliates to deliver, to the Buyer a certificate
signed under penalties of perjury (i) stating that it is not a foreign
corporation, foreign partnership, foreign trust or foreign estate, (ii)
providing its U.S. Employer Identification Number and (iii) providing its
address, all pursuant to Section 1445 of the Code. At the Closing, the Buyer
shall deliver to the Sellers a statement providing its U.S. Employment
Identification Number and its address.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 Termination of Agreement. The Parties may terminate this Agreement,
as provided below:
(a) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time before the Closing;
(b) the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time before Closing if the Closing shall not have occurred
on or before January 31, 2003 (unless the failure results primarily from the
Buyer itself breaching any representation, warranty or covenant contained in
this Agreement);
(c) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time before the Closing if the Closing shall not have
occurred on or before January 31, 2003 (unless the failure results primarily
from the Sellers breaching any representation, warranty or covenant contained in
this Agreement);
(d) the Buyer or the Sellers may terminate this Agreement if any
court of competent jurisdiction or any governmental, administrative or
regulatory authority, agency or body shall have issued an order, decree or
ruling or shall have taken any other action permanently enjoining, restraining
or otherwise prohibiting the transactions contemplated hereby or impairing use
or exploitation of any Assets and such order, decree, ruling or other action
shall have become final and nonappealable; and
(e) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time before the Closing to the extent that the Buyer
does not provide its consent to the assignment of
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the Lease Agreements to a third party (whether pursuant to a direct assignment
or pursuant to a transfer of control) designated by the Sellers.
10.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10.1, all rights and obligations of the Parties with respect
to any Assets not theretofore sold to the Buyer hereunder shall terminate
without any liability of any Party to any other Party (except for any liability
of any Party then in breach); provided that the confidentiality provisions
contained in the Confidentiality Agreement and Sections 11.2 and 11.3 of this
Agreement shall survive termination.
ARTICLE XI
MISCELLANEOUS
11.1 Insurance. The Buyer acknowledges and agrees that, following the
Closing, the Insurance Policies of the Sellers and its Affiliates may be
terminated or modified to exclude coverage of all or any portion of the Assets
by the Sellers or El Paso Corporation or their Affiliates and, as a result, the
Buyer acknowledges that the Assets will not be insured by Sellers. The Buyer
further acknowledges that the Sellers only maintained such Insurance Policies
(including self insurance and deductible levels) that it deemed necessary in its
sole discretion or that were required by Law. Notwithstanding Section 11.1, if
any claims are made or losses occur prior to the Closing Date that relate solely
to the Assets and such claims, or the claims associated with such losses,
properly may be made against the policies retained by the Sellers or its
Affiliates pursuant to Section 11.1 or under policies otherwise retained by the
Sellers or its Affiliates after the Closing, then, subject to any limitations
under the Insurance Policies (including without limitation time restrictions on
"claims made" policies), the Sellers shall use its reasonable commercial efforts
so that the Buyer can file, notice, and otherwise continue to pursue these
claims pursuant to the terms of such policies; however nothing in this Agreement
shall require the Sellers to maintain or to refrain from asserting claims
against or exhausting any retained policies and the Sellers shall not be
required to proceed against any direct or indirect self-insured primary
insurance programs or policies of, or maintained by El Paso Corporation or any
of its Affiliates, including arrangement with carriers for claims administration
service under cost-plus reimbursement agreements, assumed retention, deductible
or retrospective rating plans or other plans or arrangements to the extent that
risk of loss thereunder is ultimately assumed or paid by El Paso or its
Affiliates.
11.2 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Parties; provided
that any Party may make any public disclosure it believes in good faith is
required by applicable Law or any listing or trading agreement concerning its
publicly traded securities (in which case the disclosing Party will advise the
other Parties before making the disclosure).
11.3 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Party.
11.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but which together will constitute one and the
same instrument.
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11.6 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given two business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:
If to the Buyer: CSTL LLC
c/o Natural Resource Partners L.P.
Suite 300, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇ ▇▇▇▇
With copy to: CSTL LLC
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Sellers: El Paso CGP Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the addresses set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
11.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic Laws of the state of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the state of
Delaware or any other jurisdiction) that would cause the application of the Laws
of any jurisdiction other than the state of Delaware.
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11.8 Entire Agreement. This Agreement (including the documents referred to
in this Agreement) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they have related in any way to the
subject matter of this Agreement. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Sellers.
11.9 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.10 Transaction Expenses. Each of the Buyer and the Sellers will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
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*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
CSTL LLC
By NRP (Operating) LLC, its sole managing member,
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Title: President and Chief Operating Officer
EL PASO CGP COMPANY
By: /s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Title: President and Chief Operating Officer
COASTAL COAL COMPANY, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
Title: President
COASTAL COAL -
WEST VIRGINIA, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
Title: President
ANR WESTERN COAL DEVELOPMENT
COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
Title: Executive Vice President
23
Natural Resource Partners L.P., a Delaware limited partnership, hereby (i)
unconditionally and irrevocably agrees with the Sellers to perform, when due,
all of the Buyer's obligations pursuant to the Purchase Agreement, (ii) agrees
to be fully bound and obligated by the terms hereof to the same extent as is the
Buyer, (iii) waives all defenses as a surety including notice, (iv) agrees that
its obligations under this paragraph shall not be impaired, diminished or
discharged by any extension of time granted by the Sellers, by any course of
dealing between the Sellers and the Buyer, or by any event or circumstance which
might operate to discharge a guarantor and (v) covenants to take any and all
actions and execute and deliver further documents reasonably requested by the
Sellers to implement and enforce such foregoing obligations.
NATURAL RESOURCES PARTNERS L.P.
By NRP (GP) LP, its General Partner
By GP Natural Resources Partners LLC, its general
partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Operating Officer
24
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