Exhibit 10.4
NON-NEGOTIABLE PROMISSORY NOTE
$8,050,000.00 JANUARY 15, 1998
HAZARD, KENTUCKY
FOR VALUE RECEIVED, and pursuant to an Amended and Restated Stock Purchase
Agreement effective December 18, 1997 (the "Agreement") among AEI Holding
Company, Inc. ("Maker"), ▇▇▇▇▇▇▇▇▇ Enterprises, Inc. ("Guarantor") and ▇▇▇▇
▇▇▇▇▇ (the "Shareholder"), the Maker promises to pay the Shareholder at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ the principal sum of EIGHT
MILLION FIFTY THOUSAND DOLLARS ($8,050,000.00) with interest accruing thereon
and subject to adjustment, as described herein, and shall be due and payable as
follows:
1. MONTHLY PAYMENTS. Maker shall make monthly payments of principal in
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the amount of Forty Cents ($0.40) per ton of coal produced, shipped and sold
from all properties owned, leased or otherwise controlled as of the date of this
Note (the "Properties")(including renewals or extensions of any lease) by ▇▇▇▇▇▇
Resources, Inc. and ▇▇▇▇▇▇ Resources Management, Inc., each a Kentucky
corporation (the "Companies") or by [formal names for the Subsidiaries] (each a
"Monthly Payment"). The Monthly Payments shall commence with the first calendar
month following the month of this Note, and shall be due on the twenty-fifth day
of each calendar month for coal shipped during the preceding calendar month and
continuing on the twenty fifth (25th) day of each and every calendar month
thereafter until the outstanding principal balance of this Note is paid in full.
2. MINIMUM ANNUAL PAYMENT. For purposes of this Note, the term "Payment
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Year" shall mean a twelve-month (12-month) period beginning on the first day of
the calendar month following the calendar month of this Note and ending on the
last day of the twelfth (12th) calendar month thereafter, and each twelve month
period thereafter. If coal shipments from the Properties during any Payment
Year do not yield an aggregate sum of Monthly Payments equal to or greater than
One Million Dollars ($1,000,000.00), Maker shall pay to the Shareholder, within
sixty (60) days after the end of such Payment Year, a payment equal to the
difference (a "Deficiency Payment") between One Million Dollars ($1,000,000.00)
and the aggregate Monthly Payments that were actually paid and attributable to
such Payment Year.
3. MATURITY DATE. The outstanding principal of this Note, all accrued
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but unpaid interest thereon and all other charges, fees or expenses hereunder
shall be due and payable in full on or before January 15, 2003 (the "Maturity
Date").
4. INTEREST. This Note shall bear interest at a fixed rate equal to six
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percent (6.00%) per annum, calculated on a calendar year basis based upon actual
dates that Monthly Payments and Deficiency Payments are made by Maker. The
accrued interest shall be paid on or before February 1 of each year for the
preceding Payment Year based upon the dates of actual payments made during such
year.
5. RIGHT OF OFFSET. If the Deferred Amount is adjusted downward pursuant
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to Article 2 of the Agreement, or pursuant to an offset as permitted under the
Agreement, Maker shall be entitled to withhold and retain (offset) any and all
Monthly Payments up to the amount of such downward adjustment or offset amount.
This right of offset shall be effective and the withholding and retention of
Monthly Payments shall commence on the date that Maker provides written notice
of the adjustment to the Shareholder.
6. PREPAYMENT. All or any part of the outstanding principal of this Note
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may be prepaid at any time without prepayment penalty or premium.
7. ACCELERATION. The entire outstanding principal amount, and all
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accrued but unpaid interest thereon, of this Note shall be due and payable
immediately upon the closing of a transaction involving the sale of
substantially all of the shares of either the Maker or the Guarantor (excluding
any public offering) or substantially all of the assets of either the Maker or
the Guarantor unless the third party purchaser, after such transaction is
completed, has a net worth equal to or greater than the net worth of the Maker
or, as applicable, Guarantor immediately preceding the transaction.
8. EVENTS OF DEFAULT AND REMEDIES. The occurrence of any of the
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following shall be an "Event of Default" hereunder: (a) failure of Maker to make
any payment when due under this Note; (b) if Maker shall (i) make an assignment
for the benefit of creditors, (ii) have a petition initiating any proceeding
under the Bankruptcy Code filed by or against it, (iii) have a receiver,
trustee, or custodian appointed for all or any material part of its assets, or
(iv) seek to make an adjustment, settlement or extension of its debts with its
creditors generally; or (c) a proceeding being filed
by or commenced against Maker for dissolution or liquidation, or Maker
voluntarily or involuntarily terminating or dissolving or being terminated or
dissolved. Upon any Event of Default under this Note, the holder of this Note
may, at its option and without notice, declare the outstanding principal of this
Note to be immediately due and payable, in addition to any other remedies
Shareholder may have under applicable law, principles of equity, or otherwise.
9. DEFAULT RATE OF INTEREST. Upon an event of default of Maker failing
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to make any payment when due under this Note, the principal balance of this Note
shall accrue interest at a rate equal to the Prime Rate plus three percent (3%)
unless and until such default is paid or cured. For purposes of this Note,
Prime Rate shall mean the prime rate of interest as published daily in the
"Money Rates" section of the Wall Street Journal.
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10. CUMULATIVE REMEDIES. Failure of the holder of this Note to exercise
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any of its rights and remedies shall not constitute a waiver of any term,
covenant or condition of this Note, or any of the rights and remedies of such
holder, nor shall it prevent the holder of this Note from exercising any rights
and remedies with respect to the subsequent happening of the same or similar
occurrences. All rights and remedies of the holder of this Note shall be
cumulative to the fullest extent allowed by law.
11. WAIVER. The Maker waives presentment, demand, notice of dishonor,
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protest, notice of protest, notice of nonpayment or nonacceptance, any other
notice and all due diligence or promptness that may otherwise be required by
law, and all exemptions to which they may now or hereafter be entitled under the
laws of the Common wealth of Kentucky, the United States of America or any
state thereof.
12. SINGULAR AND PLURAL TERMS. Wherever used herein, the singular number
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shall include the plural, the plural the singular and the use of any gender
shall include all genders.
13. GOVERNING LAW. This Note shall be governed by and construed in
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accordance with the laws of the Commonwealth of Kentucky.
IN WITNESS WHEREOF, ▇▇▇▇▇ has executed this Note as of December 31, 1997.
AEI HOLDING COMPANY, INC.
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By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GUARANTY
In consideration of the foregoing Promissory Note in the amount of Eight
Million Fifty Thousand Dollars ($8,050,000.00) executed by AEI Holding Company,
Inc., and to induce the Holder to make, extend or continue the loan evidenced by
this Note, the undersigned Guarantor does hereby unconditionally and irrevocably
guarantee payment and performance by Maker, when due, of all of its obligations
under this Note; provided, however, that the obligations of the Guarantor
hereunder shall not exceed the aggregate sum of Eight Million Fifty Thousand
Dollars ($8,050,000.00) (exclusive of costs), which maximum sum shall be reduced
by the same amounts that the Shareholder's indemnity limit under the Agreement
is reduced, from time to time. The obligations of the Guarantor shall not be
impaired, diminished or discharged by any modification or waiver of the terms
hereof, any extension of time or other indulgence granted by the Shareholder, or
by any course of dealing between the Shareholder and Maker, and the Guarantor
hereby waives all customary guaranty and suretyship defenses generally.
The Guarantor agrees to pay on demand (a) any amount which the Shareholder
is required to pay under any bankruptcy, insolvency or other similar law on
account of any amount received by the Shareholder under or with respect to this
Note, and (b) all reasonable expenses of collecting and enforcing this guaranty
including, without limitation, reasonable expenses and fees of legal counsel,
court costs and the cost of appellate proceedings.
This guaranty is a guarantee of payment and performance and not of
collection. The Shareholder shall not be required to resort to or pursue any of
his rights or remedies under or with respect to any other agreement or any
collateral before pursuing any of his rights or remedies under this guaranty.
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The failure or delay by the Shareholder in exercising any of his rights
hereunder in any instance shall not constitute a waiver thereof in that or any
other instance. The Shareholder may not waive any of his rights except by an
instrument in writing signed by him. This guaranty may not be amended without
the written approval of the Shareholder.
GUARANTOR ▇▇▇▇▇▇▇▇▇ ENTERPRISES, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
Date: 1/15/98
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