EXHIBIT 3.15
BLACK BEAUTY COAL COMPANY
THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT
BLACK BEAUTY RESOURCES, INC.
THOROUGHBRED, L.L.C.
TABLE OF CONTENTS
ARTICLE 1..................................................................................... 3
1.1 Continuation and Admission..................................................... 3
1.2 Name and Insignia.............................................................. 3
1.3 Principal Office............................................................... 5
1.4 Term........................................................................... 5
1.5 Property Ownership............................................................. 5
ARTICLE 2..................................................................................... 6
2.1 Purposes....................................................................... 6
2.2 Other Activities............................................................... 8
2.3 Coal Marketing................................................................. 9
ARTICLE 3..................................................................................... 10
3.1 Capital Contributions.......................................................... 10
3.2 Debt: Additional Capital Contributions......................................... 11
3.3 Interest on Capital Contributions.............................................. 12
3.4 Withdrawal of Capital.......................................................... 12
3.5 Capital Accounts............................................................... 12
ARTICLE 4..................................................................................... 14
4.1 Books and Records.............................................................. 14
4.2 Fiscal Year.................................................................... 14
4.3 Reports........................................................................ 15
4.4 Tax Returns.................................................................... 16
4.5 Partner's Request for Additional Information................................... 17
4.6 Tax Matters Partner............................................................ 17
ARTICLE 5..................................................................................... 18
5.1 Bank Accounts.................................................................. 18
5.2 Investment of Excess Funds..................................................... 18
ARTICLE 6..................................................................................... 19
6.1 Net Income and Net Loss........................................................ 19
6.2 Allocation of Excess Nonrecourse Liabilities................................... 20
6.3 Allocations in Event of Transfer............................................... 20
6.4 Allocation of Gain of CIPS Transaction......................................... 21
ARTICLE 7..................................................................................... 22
7.1 Distributive Shares............................................................ 22
7.2 Elections...................................................................... 22
7.3 Partnership Treatment.......................................................... 22
ARTICLE 8..................................................................................... 23
8.1 Net Cash Flow.................................................................. 23
8.2 Distribution of Net Cash Flow.................................................. 24
8.3 Recoupment Distribution........................................................ 24
8.4 Thoroughbred Recoupment Distribution........................................... 25
8.5 Property Distributions......................................................... 25
8.6 Minimum Distributions.......................................................... 25
ARTICLE 9..................................................................................... 27
9.1 Partnership Committee.......................................................... 27
9.2 Chief Executive Officer........................................................ 30
9.3 Service Agreements; Compensation............................................... 31
9.4 Related Party Transactions..................................................... 32
9.5 Acts by Partners............................................................... 33
ARTICLE 10.................................................................................... 33
10.1 Continuance.................................................................... 33
10.2 Events Causing Dissolution..................................................... 33
10.3 Election Following Event Causing Dissolution................................... 35
10.4 Alternative to Liquidation..................................................... 36
10.5 Liquidation and Winding Up Upon Dissolution.................................... 36
10.6 Distributions Upon Dissolution................................................. 37
ARTICLE 11.................................................................................... 39
11.1 Assignment of Partner's Interest............................................... 39
11.2 Transfer to Affiliates......................................................... 39
ARTICLE 12.................................................................................... 41
12.1 Information.................................................................... 41
12.2 Good Faith of Partners and Affiliates.......................................... 42
12.3 Applicant Violator System...................................................... 42
ARTICLE 13.................................................................................... 43
13.1 Nature of Obligations Among Partners........................................... 43
13.2 Indemnification................................................................ 44
ARTICLE 14.................................................................................... 47
ARTICLE 15.................................................................................... 47
ARTICLE 16.................................................................................... 48
16.1 General Buy-Sell............................................................... 48
16.2 Conversion of Partnership to Corporation and Sale of
Initiating Partner's Shares in New Corporation................................. 51
ARTICLE 17.................................................................................... 56
17.1 Addresses...................................................................... 56
17.2 Effective Date................................................................. 56
ARTICLE 18.................................................................................... 57
18.1 Binding on Successors.......................................................... 57
18.2 Amendments..................................................................... 57
18.3 Waiver and Consent............................................................. 57
18.4 Limitation on Right to Purchase Partnership Interest........................... 58
18.5 Waiver of Dissolution under the Uniform Partnership Act........................ 58
18.6 Relationship of the Partners................................................... 58
18.7 Further Assurances............................................................. 58
18.8 Severability................................................................... 58
18.9 Agreement in Counterparts...................................................... 59
18.10 Entire Agreement............................................................... 59
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THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT
THIS THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT (this
"Agreement") is signed this __ day of ______, 1999 but not effective until the
1st day of January, 1999 by and among (i) BLACK BEAUTY RESOURCES, INC., an
Indiana corporation ("BBR"), and (ii) THOROUGHBRED, L.L.C., a Delaware limited
liability company ("Thoroughbred") (BBR and Thoroughbred are hereinafter
collectively referred to as the "Partners" and each individually as a
"Partner"). For purposes of this Agreement, the term "Partner" shall include any
party then acting in such capacity in accordance with the terms of this
Agreement.
RECITALS
A. Pursuant to a Partnership Agreement dated May 25, 1990 (the
"Original Agreement"), BBR and The Pittsburg & Midway Coal Mining Co., a
Missouri corporation ("P&M") formed a general partnership under the Indiana
Uniform Partnership Act known as "Black Beauty Coal Company" (the "Partnership")
for the limited purposes set out in the Original Agreement. Pursuant to an
Amended and Restated Partnership Agreement dated August 23, 1994 (the Amended
Agreement) Thoroughbred was admitted as a general partner in the Partnership.
Pursuant to a Second Amended and Restated Partnership Agreement dated January 1,
1998 (the "Second
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Amended Agreement") Thoroughbred increased its interest in the Partnership to
43 1/3%.
B. Thoroughbred and P&M have entered into an Agreement effective
January 1, 1999, pursuant to which Thoroughbred will acquire, subject to the
terms and conditions thereof, P&M's entire interest in the Partnership, (the
"Definitive Agreement") and pursuant to the terms of a certain agreement (the
"First Amendment to the Interest Acquisition Agreement" or the "Option") between
Thoroughbred and BBR, effective January 1, 1999, Thoroughbred agreed to exercise
an option to purchase an additional five percent (5%) interest in the
Partnership contingent on the Closing of the Definitive Agreement. The
consummation of the transactions set out in the Definitive Agreement and the
Option result in Thoroughbred acquiring an additional 38 1/3% interest in the
Partnership (for an adjusted interest of 81 2/3%) and BBR owning an adjusted
interest in the Partnership equal to 18 1/3%. Upon the closing of the Definitive
Agreement, P&M will no longer be a partner in the Partnership.
C. BBR, P&M and Thoroughbred desire to set out in this Agreement
the adjusted ownership percentages of BBR and Thoroughbred and the respective
rights, duties and liabilities of the Partners with respect to the Partnership.
This Agreement is intended by the Partners as an amendment and restatement of
the Second Amended Agreement.
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D. The execution and delivery of this Agreement is in connection
with the consummation of the transactions contemplated by the Definitive
Agreement and the Option.
NOW, THEREFORE, in consideration of the Recitals and the mutual
covenants and undertakings set forth herein, BBR and Thoroughbred agree as
follows:
ARTICLE 1
FORMATION AND ADMISSION
1.1 CONTINUATION AND ADMISSION. The Partners do hereby continue
the general partnership known as Black Beauty Coal Company, formed pursuant to
the Original Agreement, as amended by the Amended Agreement and the Second
Amended Agreement, under the Indiana Uniform Partnership Act (the "IUPA"), for
the purposes and term set out in this Agreement. The terms of the Second Amended
Agreement shall be amended and restated to the extent of matters addressed in
this Agreement.
1.2 NAME AND INSIGNIA. The Partnership shall do business under the
name "Black Beauty Coal Company" and, where appropriate, may describe itself as
"A Partnership of Black Beauty Resources, Inc., and Thoroughbred, LLC."
("Partnership Description"). BBR hereby consents to use of the name "Black
Beauty Coal Company" by the Partnership. This name shall continue to be
registered in Indiana under applicable Indiana law
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and in such other states as the Partnership may do business. The Partners shall
execute, and the Partnership shall file, such certificates of assumed name as
shall be required by law.
(a) BBR agrees that the name "Black Beauty Resources, Inc." may be
used by the Partnership in the Partnership Description and that the current logo
of BBR may be used by the Partnership in connection with its business.
Thoroughbred agrees that the name "Thoroughbred, LLC" may be used by the
Partnership in the Partnership Description. The use of the name and logo of
"Black Beauty Resources, Inc." and the name and "Thoroughbred, LLC" shall be
limited to business documentation of the Partnership and, where appropriate, to
its marketing publications and on or in connection with the products or services
to be sold or rendered by the Partnership.
(b) Unless approved in writing by Thoroughbred, the Partnership
shall not be permitted at any time to use the logo or any other emblem used by
Thoroughbred or its Affiliates to identify it or its business, assets or
products or to use any other indicia which might be confused with any such logo
or other emblem or which might indicate a connection with Thoroughbred or its
Affiliates.
(c) If the Partnership is terminated either in accordance with any
of the provisions of Article 10 hereof or by the sale by a Partner of its
Partnership Interest to any person
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other than an Affiliate (as defined in Section 11.2 hereof), the Partnership
shall make no further use of the privileges made available by such former
Partner pursuant to this Section 1.2 unless specifically authorized by such
former Partner.
1.3 PRINCIPAL OFFICE. The principal office of the Partnership
shall be at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. The principal office may
hereafter from time to time be moved to such other place as may be designated by
the Partnership Committee (which committee is described in Section 9.1 hereof).
The books and records of the Partnership shall be maintained at the
Partnership's principal place of business.
1.4 TERM. The term of the Partnership shall continue until
December 31, 2100, unless sooner terminated as herein provided or pursuant to
law.
1.5 PROPERTY OWNERSHIP. All assets and property owned by the
Partnership, whether real or personal, tangible or intangible, shall be held in
the name of the Partnership unless otherwise determined by the Partnership
Committee.
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ARTICLE 2
PURPOSES AND NON-COMPETITION
2.1 PURPOSES. The Partnership is formed to conduct, or own all or
part of, coal mining, processing, marketing, loading, trucking and shipping
businesses in and from Indiana, Illinois, Kentucky (West of Interstate 65), Iowa
and Missouri (collectively, the "Illinois Basin") and such other locations as
the Partnership Committee may approve. The purposes of the Partnership are
limited to the following coal-related purposes:
(a) The acquisition, by lease, sublease, purchase or
otherwise, of coal reserves;
(b) The development and conduct of mining, processing,
loading, trucking and shipping operations relative to the Partnership's coal
reserves, either directly with employees of the Partnership or through contract
miners;
(c) The permitting and bonding of all coal mining,
processing, loading, trucking and shipping operations on or relating to the
Partnership's coal reserves and the completion of reclamation obligations
relative to the coal mining, processing, loading, trucking or shipping
operations conducted on or relating to the Partnership's coal reserves;
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(d) The purchasing, selling, brokering, processing,
loading, trucking and/or shipping of coal from whatever source and the
marketing, selling and/or delivery of coal from whatever source, both within and
outside of the Illinois Basin;
(e) The acquisition of all or portions of existing
businesses, relating to the mining, processing, selling, loading, trucking or
shipping of coal; including, without limitation, the formation of partnerships,
corporations, limited liability companies or joint ventures relative to any of
the foregoing;
(f) To employ personnel necessary for the conduct of the
business of the Partnership;
(g) To form entities to undertake any actions or business
authorized to be undertaken by the Partnership directly.
(h) The investment of the income earned by the
Partnership prior to distribution to the Partners; and
(i) All other activities necessary, appropriate,
incidental or desirable in connection with the foregoing, or otherwise
contemplated in this Agreement.
The purposes of the Partnership shall not be extended, by implication
or otherwise, beyond the purposes set forth in this Section 2.1 without the
approval of the Partnership Committee.
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2.2 OTHER ACTIVITIES. The Partners each acknowledge that
Thoroughbred, and its Affiliates, own, lease or otherwise control coal reserves,
coal mines and related facilities in the Illinois Basin. Nothing in this Section
2.2 shall prohibit any Partner and its Affiliates from (i) acquiring coal
properties or coal businesses near and in connection with their active or
suspended coal mines or coal reserves and (ii) selling or leasing coal reserves
or coal mines or hiring a contract miner. It is also the intent of the Partners
that the Partnership should continue to expand its coal mining operations in
Indiana and Illinois. Except as provided below, for a period of five (5) years
from August 23, 1994, if a Partner or an Affiliate of a Partner (except Peabody
Coal Company with respect to Thoroughbred) has a coal-related business
acquisition or merger opportunity within Indiana or Illinois ("Opportunity"), it
shall be obligated to present such Opportunity to the Partnership Committee for
consideration by the Partnership. If the Partnership does not elect to pursue an
Opportunity, the Partner who brought the Opportunity to the attention of the
Partnership Committee, if such Partner voted in favor of the Partnership
pursuing such Opportunity, shall be free to pursue such Opportunity. With the
exceptions of the items listed in this Section 2.2 and the acquisition of a coal
business opportunity located partially in Indiana or Illinois and partially in
another state(s), neither Partner nor any Affiliate (except Peabody Coal Company
with respect to Thoroughbred) shall compete with the Partnership in
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the acquisition of coal businesses or coal reserves in Indiana and Illinois.
2.3 COAL MARKETING. The Partners each acknowledge that
Thoroughbred, and its Affiliates, may compete from time to time with the
Partnership in the marketing and selling of coal to customers. The Partners and
the Partnership have no agreement regarding such competition in the marketing
and selling of coal, other than the provisions of this Section 2.3 regarding
confidentiality and consent to pursuit of common sales opportunities. Neither
BBR nor Thoroughbred, nor their Affiliates, shall use any information gained
from the Partnership as a result of being a Partner for its own gain to the
detriment of the Partnership. Without limiting the foregoing, in the event the
Partnership has a sales opportunity which is also being pursued by another
Partner or an Affiliate of a Partner for its own account, such Partner shall be
deemed to consent to the pursuit by the Partnership of the sales opportunity on
such terms as may be approved by the other Partner through the Partnership
Committee or as are within the general authority of the officers of the
Partnership.
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ARTICLE 3
CAPITAL CONTRIBUTIONS
3.1 CAPITAL CONTRIBUTIONS.
(a) Pursuant to the terms of the Original Agreement, BBR
and P&M made capital contributions to the Partnership, and thereafter, the
capital accounts of BBR and P&M have been administered in accordance with the
Original Agreement and the Amended Agreement. Pursuant to the terms of the
Definitive Agreement and the Option respectively, Thoroughbred has acquired the
interest in the Partnership held by P&M and five percent (5%) of the interest in
the Partnership held by BBR.
(b) Upon completion of the transaction described or
referred to in Section 3.1(a) hereof, Thoroughbred shall own a 81 2/3% interest
in the Partnership and BBR shall own a 18 1/3% interest in the Partnership (the
interests of Thoroughbred and BBR in the Partnership shall be referred to herein
as their "Percentage Interests, or individually as their Percentage Interest)
and the terms of this Agreement shall be construed consistent with the stated
Percentage Interests of the Partners.
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3.2 DEBT; ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) It is contemplated by the Partners that the
Partnership shall borrow from whatever source funds sufficient to support (i)
the Partnership's short term working capital needs, (ii) the acquisition of coal
related businesses and (iii) the development of its coal properties, which
developments may include, without limitation, preparation plants, loading
facilities, mining equipment and other mine improvements. It is the intent of
the Partners that capital for maintenance or replacement of existing Partnership
operations shall be funded out of operating cash flow. As among the Partners,
each Partner shall be responsible for its Percentage Interest of all Partnership
indebtedness. It is contemplated by the Partners that no Partner will, by
capital contributions, finance its respective share of the cost of acquisitions
or of developing the coal properties of the Partnership. Furthermore, no Partner
shall be obligated by this Agreement to obtain financing on behalf of the
Partnership, should the Partnership be unable on its own to obtain such
financing. Any loan or other financing agreements of the Partnership (excluding
obligations of less than $500,000 relating to the lease or acquisition of
equipment, trade payables, permit and bond liability and coal and surface
leases) shall specifically provide that joint and several liability of the
Partners is waived, and that recourse against each Partner and its respective
Affiliates shall not in total exceed each
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Partners Percentage Interest of the outstanding balance (including principal,
accrued interest and loan expenses) of said financing.
(b) No Partner shall be required to make additional
capital contributions to the Partnership. If any additional capital
contributions to the Partnership are approved by the Partnership Committee, such
contributions shall be in cash unless otherwise approved by the Partnership
Committee.
3.3 INTEREST ON CAPITAL CONTRIBUTIONS. No Partner shall be
entitled to interest on any capital contributions made to the Partnership.
3.4 WITHDRAWAL OF CAPITAL. No Partner shall be entitled to
withdraw any part of its capital contributions to the Partnership, or receive
any distributions from the Partnership, except as provided in this Agreement. No
Partner shall be entitled to demand or receive any property from the Partnership
other than cash, except as otherwise expressly provided for herein.
3.5 CAPITAL ACCOUNTS. There shall be established on the books of
the Partnership a capital account ("Capital Account") for each Partner. It is
the intention of the Partners that such Capital Account be maintained in
accordance with the provisions of Treas. Reg. 1.704-l (b)(2)(iv), and this
Agreement shall be so
13
construed. Accordingly, such Capital Account shall initially be credited with
the initial capital contribution of the Partner, and shall thereafter be
increased by (i) any cash or the fair market value of any property contributed
by such Partner (net of any liabilities assumed by the Partnership or to which
the contributed property is subject), and (ii) the amount of all net income
(whether or not exempt from tax) allocated to such Partner hereunder, and
decreased by (i) the amount of all net losses allocated to such Partner
hereunder (including expenditures described in section 705(a)(2)(B) of the
Internal Revenue Code of 1986, as amended ("Code"), or treated as such an
expenditure by reason of Treas. Reg. ' 1.704-1(b) (2) (iv) (i)), and (ii) the
amount of cash, and the fair market value of property (net of any liabilities
assumed by such Partner or to which the distributed property is subject)
distributed to such Partner. If a Partner transfers all or any portion of such
Partner's interest in the Partnership in accordance with the terms of this
Agreement, the Capital Account of the transferor shall become the Capital
Account of the transferee to the extent of the Partnership interest transferred.
The transfer from P&M to Thoroughbred under the Definitive Agreement and from
BBR to Thoroughbred under the Option has each effected a change in the capital
accounts of P&M, BBR and Thoroughbred in accordance with the foregoing sentence.
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ARTICLE 4
ACCOUNTING
4.1 BOOKS AND RECORDS. The Partnership Committee shall cause the
Partnership to maintain full and accurate books and records at the Partnership's
principal place of business, showing all receipts and expenditures, assets and
liabilities, net income or loss, and all other records necessary for recording
the Partnership's business and affairs, including those sufficient to record the
allocations and distributions to the Partners provided for in this Agreement.
Such books and records shall be maintained in accordance with generally accepted
accounting principles; provided that, adequate records concerning tax
allocations shall be simultaneously maintained by the Partnership. Such books
and records shall be open to the inspection and examination of each Partner by
its duly authorized representatives at all reasonable times.
4.2 FISCAL YEAR. The fiscal year of the Partnership shall be the
calendar year ("Fiscal Year").
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4.3 REPORTS
(a) Within 90 days after the close of each Fiscal Year of
the Partnership, the Partnership shall furnish to each Partner a report of the
business and operations of the Partnership during such Fiscal Year. Unless
otherwise agreed to by the Partnership Committee, such report shall contain
financial statements prepared by the Partnership which are audited by the
certified public accountants employed by the Partnership. Any financial
statement submitted pursuant to this Section 4.3(a) shall be deemed correct,
binding and conclusive upon the Partners unless objection thereto is made by a
Partner within 45 days after the statement is received by such Partner.
(b) Within 10 business days after the close of each
calendar month, the Partnership shall furnish to each Partner a report of the
business and operations of the Partnership for such calendar month. Unless
otherwise agreed to by the Partnership Committee, such report shall contain
unaudited financial statements prepared by the Partnership, be in such form as
the Partnership Committee may require and shall include a balance sheet as of
the end of such calendar month, a statement of the net income or net loss of the
Partnership for such calendar month and such other information as in the
judgment of the Partnership Committee shall be reasonably necessary for the
Partners to be advised of the results of the Partnership's operations and its
financial condition.
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(c) Each Fiscal Year the Partnership Committee shall
establish the date by which the Chief Executive Officer shall submit to the
Partnership Committee an annual budget and a business plan for the next
succeeding Fiscal Year of the Partnership as well as longer term business plans
for the Partnership which are requested by the Partners. The date for submission
established by the Partnership Committee shall accommodate the budgeting process
of all Partners; provided that, the Partnership shall have at least 60 days
advance notice from the Partners of the date for submission of the budget and
business plans. All budgets and business plans required to be submitted by the
Chief Executive Officer to the Partnership Committee pursuant to this Section
4.3(c) shall be approved, or modified and then approved, by the Partnership
Committee, and the Chief Executive Officer shall thereafter conduct the business
of the Partnership in accordance with the annual budget, business plan and
delegation of authority approved by the Partnership Committee, unless otherwise
directed by the Partnership Committee. Any Partner may designate in the budget
capital projects which must be specifically approved by the Partnership
Committee prior to the commencement of expenditures for such project.
4.4 TAX RETURNS. The Partnership Committee shall cause all
required federal, state and local partnership income, franchise, property and
other tax returns, including information returns, to
17
be filed with the appropriate office of the relevant taxing jurisdiction or
agency. In order to accommodate the following provision regarding review of
drafts of the Federal and state income tax returns of the Partnership, the
Partnership shall seek each year a three month extension of the date on which
such returns must be filed. With respect to the Federal and state income tax
returns of the Partnership, the Partnership shall submit to each Partner, or,
with the consent of each Partner, make available for review, drafts of the
proposed returns, including the related work papers, books, records and any
other documents used in the preparation of such returns, as soon as possible,
but by no later than April 30 of each year, to permit review and approval of
such returns by each Partner prior to filing. All expenses incurred In
connection with such tax returns and information returns, as well as for the
reports referred to in Section 4.3 hereof, shall be expenses of the Partnership.
4.5 PARTNER'S REQUEST FOR ADDITIONAL INFORMATION. The Chief
Executive Officer shall also furnish to any Partner such other reports of the
Partnership's operations and conditions as may reasonably be requested by such
Partner.
4.6 TAX MATTERS PARTNER. Thoroughbred shall be the Tax Matters
Partner for the Partnership as defined in Section 6231(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Tax Matters Partner shall not
take any action in such
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capacity without first notifying, and receiving the concurrence of, the
other Partners.
ARTICLE 5
BANK ACCOUNTS AND EXCESS FUNDS
5.1 BANK ACCOUNTS. All funds of the Partnership shall be deposited
in its name into such checking or savings accounts, time certificates or
short-term money market funds as shall be designated by the Partnership
Committee. Withdrawals therefrom shall be made upon such signature or signatures
(or other authorization form) as determined by the Partnership Committee.
5.2 INVESTMENT OF EXCESS FUNDS. The Partnership may invest excess
funds not required in the Partnership's business, and not required to be
distributed pursuant to the terms of this Agreement, in short-term United States
Government obligations maturing within 1 year or in other securities approved by
the Partnership Committee.
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ARTICLE 6
ALLOCATION OF NET INCOME AND LOSS
6.1 NET INCOME AND NET LOSS.
(a) Except as specified in Section 6.4, the net income
and net loss of the Partnership for each of the next five Fiscal Years
(beginning with calendar year 1998) shall be allocated 100% to Thoroughbred,
except the allocation for Fiscal Year 1998 shall be allocated 67 2/3% to
Thoroughbred and 33 1/3% to P&M. The net income and net loss of the Partnership
for each fiscal year beginning after the 2002 fiscal year shall be allocated to
the partners in accordance with their respective Percentage Interest.
(b) For Federal, state and local income tax purposes
only, depreciation (cost recovery) and cost depletion deductions to which the
Partnership is entitled with respect to the assets of the Partnership and gains
and losses from sales or other dispositions of assets of the Partnership shall
be determined based upon the provisions of section 704(c) of the Code with
respect to that portion of assets which was contributed by a Partner, and using
the principles of section 704(c) of the Code with respect to that portion of the
Partnership's book value of the assets which is attributable to the revaluation
of the assets
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which occurred in contemplation of the admission of Thoroughbred to the
Partnership. All such allocations shall be made in accordance with the
"traditional method" (within the meaning of Treas. Reg. ' 1.704-3(b)).
(c) For Federal, state and local income tax purposes
only, percentage depletion shall be allocated pursuant to Section 6.1 (a)
hereof.
6.2 ALLOCATION OF EXCESS NONRECOURSE LIABILITIES. For purposes of
section 752 of the Code and the regulations thereunder, the excess non-recourse
liabilities of the Partnership, within the meaning of Treas. Reg. 1.752-3(a)(3),
if any, shall be allocated to each Partner in accordance with its respective
Percentage Interest.
6.3 ALLOCATIONS IN EVENT OF TRANSFER. In the event of the transfer
of a Partner's interest (in accordance with and subject to the provisions of
this Agreement) in the Partnership at any time other than at the end of a Fiscal
Year, or the admission of a new Partner at any time other than the end of a
Fiscal Year, the periods before and after such transfer or admission shall be
treated as separate fiscal years, and the Partnership's net income, net loss and
credits for each of such deemed separate fiscal years shall be allocated in
accordance with Section 6.1 (a) for each of such deemed separate fiscal years.
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6.4 ALLOCATION OF GAIN OF CIPS TRANSACTION. For Federal, state and
local income tax purposes only, the deferred income to be recognized by the
Partnership with respect to prepayments made pursuant to the CIPS Transaction
(as hereinafter defined), which deferred income has been transferred to the
Partnership with recourse to BBR shall continue to be allocated entirely to BBR
and none of the deferred income shall be allocated to the other Partner. The
Partners acknowledge that this item should not be governed by the provisions of
Code Section 704(c) and related regulations. However, in the event the IRS or
any state, local or other taxing authority reallocates the deferred income to
P&M or Thoroughbred, BBR will indemnify P&M or Thoroughbred, as applicable for
all Adverse Consequences resulting from such reallocation. For purposes of this
Agreement, the term "CIPS Transaction" shall mean the transactions referenced in
(i) an Extension and Amendment to Coal Sale and Purchase Agreement dated
September 7, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Public Services Company
("CIPS"), as amended by a letter dated December 8, 1989, and (ii) a Memorandum
of Understanding dated August 17, 1989 among CIPS, BBR and Gibco Motor Express,
Inc.
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ARTICLE 7
DISTRIBUTIVE SHARES AND FEDERAL INCOME TAX ELECTION
7.1 DISTRIBUTIVE SHARES. For purposes of Subchapter K of the Code,
the distributive shares of the Partners of each item of Partnership taxable
income, gains, losses, deductions or credits for any Fiscal Year shall be in the
same proportions as their respective shares of the net income or loss of the
Partnership allocated to them pursuant to Section 6.1 hereof. Notwithstanding
the foregoing, to the extent not inconsistent with the allocation of gain
provided for in Section 6.1(a) and Section 6.1(b) hereof, gain recognized by the
Partnership which represents ordinary income by reason of recapture of
depreciation, cost recovery or depletion deductions for Federal income tax
purposes shall be allocated to the Partner to whom such depreciation, cost
recovery or depletion deduction to which such recapture relates was allocated.
7.2 ELECTIONS. Any and all elections required or permitted to be
made by the Partnership under the Code, including the election provided for in
section 754 of the Code, shall be made in accordance with the decisions of the
Partnership Committee.
7.3 PARTNERSHIP TREATMENT. The Partnership shall be treated as a
partnership for purposes of Federal, state and local income tax and other taxes,
and the Partners shall not take any
23
position or make any election, in a tax return or otherwise, inconsistent with
such treatment.
ARTICLE 8
DISTRIBUTIONS
8.1 NET CASH FLOW. For purposes of this Agreement, the term "Net
Cash Flow" for any period shall mean the excess, if any, of (a) the sum of (i)
the gross receipts (excluding loan proceeds) of the Partnership for such period
plus (ii) any funds released by the Partnership Committee from previously
established reserves referred to in (b)(v) of this Section 8.1, over (b) the sum
of (i) all cash operating expenses paid by the Partnership for such period,
including, but not by way of limitation, salaries, taxes, interest, insurance
premiums, royalties, rentals, utilities and fees, (ii) all cash capital
expenditures paid for such period for maintenance or replacement of existing
Partnership operations, (iii) all amounts paid by the Partnership in such period
on account of amortization of the principal of any debts or liabilities of the
Partnership, (iv) the amount of any distribution payable to BBR under Section
8.3 hereof or Thoroughbred under Section 8.4 hereof, and (v) reasonable reserves
to maintain Partnership finances in compliance with financing covenants, as
shall be determined from time to time by the Partnership Committee.
Notwithstanding the foregoing, to the extent that any of the payments described
in (b)(i), (ii) or
24
(iii) above are paid from capital contributions, from loan proceeds or from
previously established reserves, such payments shall not be taken into account
in determining Net Cash Flow for such period.
8.2 DISTRIBUTION OF NET CASH FLOW. The Net Cash Flow for all
Fiscal Years shall be distributed at such time or times as shall be determined
by the Partnership Committee; provided that, unless otherwise agreed to by all
Partners, the Net Cash Flow for each Fiscal Year, to the extent not previously
distributed, shall be distributed within 90 days following the close of each
Fiscal Year. It is the intention of the Partners that the Net Cash Flow be
distributed quarterly if the Partnership Committee deems such quarterly
distribution prudent. All such distributions of Net Cash Flow shall be
distributed to the Partners in accordance with their respective Percentage
Interests.
8.3 RECOUPMENT DISTRIBUTION. The Partnership shall distribute to
BBR on a monthly basis (by the 20th of each month for the preceding month) an
amount equal to all advance royalty payments actually recouped by the
Partnership during the preceding month arising from advance royalty payments
relating to any coal lease contributed to the Partnership by BBR made on or
prior to the date of the Original Agreement. For purposes hereof, the
Partnership shall be deemed to recoup advance royalties chronologically,
beginning with advance royalties paid
25
first and continuing up to the advance royalties most recently paid.
8.4 THOROUGHBRED RECOUPMENT DISTRIBUTION. The Partnership shall
distribute to Thoroughbred on a monthly basis (by the 20th of each month for the
preceding month) an amount equal to all advance royalty payments actually
recouped by the Partnership during the preceding month arising from advance
royalty payments relating to any coal lease contributed to the Partnership by
either P&M or Thoroughbred, made on or prior to the date of this Agreement. For
purposes hereof, the Partnership shall be deemed to recoup advance royalties
chronologically, beginning with advance royalties paid first and continuing up
to the advance royalties most recently paid.
8.5 PROPERTY DISTRIBUTIONS. If any property of the Partnership,
other than cash, is distributed by the Partnership to a Partner (in connection
with the liquidation of the Partnership or otherwise), then the fair market
value of such property shall be used for purposes of determining the amount of
such distribution. The fair market value of the property distributed shall be
agreed to by the Partners; provided that, if the Partners cannot so agree, the
issue shall be submitted to arbitration as provided in Article 15 hereof.
8.6 MINIMUM DISTRIBUTIONS. If the aggregate of all Net Cash Flow
distributions made by the Partnership to the Partners
26
for any Fiscal Year does not equal or exceed the following Minimum Distribution
Amount, the Partnership shall, on or before 90 days following the close of each
Fiscal Year of the Partnership, distribute to the Partners the amount by which
the aggregate of all Net Cash Flow distributions during the preceding Fiscal
Year is less than the following amount (the "Minimum Distribution Amount"). The
Minimum Distribution Amount is equal to the sum of (i) the aggregate net income
for Federal income tax purposes of the Partners as reflected, or which shall be
reflected, on the Schedule K-l for the Partnership for such preceding Fiscal
Year, multiplied by the highest marginal Federal corporate tax rate for the
applicable Fiscal Year plus 4% and (ii) $6,000,000; provided that, the Minimum
Distribution Amount for any Fiscal Year shall not exceed the net income (before
income taxes) of the Partnership for such Fiscal Year. Any distribution made
pursuant to this Section 8.6 shall be made to the Partners in accordance with
their respective Percentage Interests.
27
ARTICLE 9
Partnership Management
9.1 PARTNERSHIP COMMITTEE.
(a) The Partnership shall be managed by a committee (the
"Partnership Committee") comprised of representatives of the Partners. The
Partnership Committee shall have authority over all Partnership actions,
including, but not limited to, the "Major Decisions" set forth on Exhibit "9.1"
to this Agreement.
(b) The regular members of the Partnership Committee
shall consist of three representatives of Thoroughbred and two representatives
of BBR (herein "Representatives") of each Partner. Each Partner shall designate
in writing to the other Partners such Partner's Representatives, and each
Partner agrees to fill any vacancies within 15 days. Representatives may also be
employees of the Partnership. By written notice, each Partner may designate up
to the same number of alternate Representatives to act in the absence of its
regular Representatives. The Representatives shall serve for indefinite terms at
the pleasure of the appointing Partner and may be removed by such Partner at any
time and for any reason. With regard to any action or decision by the
Partnership Committee, the Representatives appointed by each Partner shall cast
votes in accordance with each Partner's respective Partnership Interest. Any
action taken
28
by the Partnership (through its officers or employees, including the Chief
Executive Officer) in compliance with the direction or decision of the
Partnership Committee shall be binding upon the Partnership and each Partner.
(c) Only the decisions listed on Exhibit 9.1 "Major
Decisions" attached hereto shall require the approval of all Partners acting
through their appointed Representatives. All other decisions of the Partnership
shall be made by majority vote. An action of the Partnership Committee shall be
by a resolution adopted at a Partnership Committee meeting or, without a
meeting, by a written consent signed by at least one Representative of each
Partner. The Secretary of the Partnership Committee and any Assistant Secretary
may execute certificates setting forth actions taken by the Partnership
Committee or which reflect delegation of authority by the Partnership Committee
to employees of the Partnership.
(d) Meetings of the Partnership. Committee shall be held
at least quarterly. Meetings of the Partnership Committee shall also be held
upon call by any member of the Partnership Committee. Unless waived by at least
one Representative of each Partner, the calling of a meeting of the Partnership
Committee shall require a minimum of three (3) days' notice. At least one
Representative of each Partner must be present to constitute a quorum and
convene a meeting of the Partnership Committee. Each Partner may invite to the
meetings of the Partnership Committee
29
such attorneys and advisors as such Partner deems appropriate. Meetings of the
Partnership Committee may, if at least one Representative of each Partner
consents, be held by telephone conferences in which each participating
Representative can hear all other participating Representatives, or in such
other manner as shall be agreed to by the Representatives. Unless otherwise
agreed by at least one Representative of each Partner, all meetings shall be
held at the principal office of the Partnership.
(e) The Partnership Committee is authorized to adopt
rules concerning the conduct of the affairs of the Partnership Committee and the
Partnership.
(f) The chair of the Partnership Committee (who shall be
a Representative of one of the Partners) shall rotate among the Partners. A
Representative of Thoroughbred shall be the chair of the Partnership Committee
during 1999, and a Representative of BBR shall be the chair of the Partnership
Committee during 2000 (and thereafter such chair shall rotate annually in that
sequence). The Partnership Committee shall appoint a Secretary and one or more
Assistant Secretaries to keep complete minutes of the proceedings and decisions
of the Partnership Committee and take such other actions as may be authorized
under this Agreement or by the Partnership Committee.
30
(g) No Partner, shall have any right, power or obligation
to exercise any control over the hiring of miners or over the work force of the
Partnership, including, but not limited to, any employment benefits or other
terms and conditions of employment for the employees of the Partnership, and all
such matters are delegated to the management employees of the Partnership.
Thoroughbred and BBR shall take no part in, and shall have no right, power or
obligation with respect to, any matter relating to the hiring of miners.
9.2 CHIEF EXECUTIVE OFFICER.
(a) The Partnership Committee shall select an individual
to be the Chief Executive Officer for the Partnership (the "Chief Executive
Officer"). The current Chief Executive Officer is ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇. Upon the
Chief Executive Officer's ceasing to so act for any reason, a replacement Chief
Executive Officer shall be elected by the Partnership Committee.
(b) Within the scope of authority delegated by the
Partnership Committee to the Chief Executive Officer, day to day control and
management of the business of the Partnership shall be vested in the Chief
Executive Officer; provided that, the Chief Executive Officer shall be subject
to control and direction at all times by the Partnership Committee. The Chief
Executive Officer may not take any action on behalf of the Partnership if
authority for such action is not delegated (either specifically
31
or generally) to the Chief Executive Officer by the Partnership Committee.
(c) The Chief Executive Officer may be removed upon the
decision of the Partnership Committee to remove the Chief Executive Officer,
subject to any employment contract between the Partnership and the Chief
Executive Officer. Further, unless otherwise agreed to by the Partnership
Committee, the term of office of the Chief Executive Officer shall be at the
pleasure of the Partnership Committee. Any extension or renewal of the term of
office of any Chief Executive Officer shall require the approval of the
Partnership Committee. The decision of the Partnership Committee not to renew or
not to extend the term of any Chief Executive Officer shall not alter the.
Partnership's obligations under any employment contract approved by the
Partnership Committee. The Chief Executive Officer may delegate responsibility
and grant authority to other employees of the Partnership, subject to the
limitations on the authority of the Chief Executive Officer set out herein and
actions or directives from the Partnership Committee.
9.3 SERVICE AGREEMENTS; COMPENSATION. To the extent and for the
period that it is not practicable or economic to include in the staff of the
Partnership personnel capable of providing certain management and staff services
required by the Partnership, the Partnership, through the Partnership Committee,
may enter into appropriate service agreements with BBR and/or
32
Thoroughbred for such services. The Partnership Committee shall establish
policies as to the use of BBR's and Thoroughbred's services. Further, the
Partnership, through the Partnership Committee, may contract with any Partner
for the temporary assignment of one or more employees of any Partner to the
Partnership. Such loaned employees shall work for the Partnership for the period
of the temporary assignment by the Partner, but shall remain employees of the
assigning Partner and shall be paid by the assigning Partner, although the
Partnership shall reimburse to the assigning Partner the cost of such employee.
Except with regard to service agreements and loaned employees described above,
no Partner shall be entitled to compensation for services rendered to the
Partnership. Representatives on the Partnership Committee shall receive no
compensation for acting as Representatives on the Partnership Committee. The
Partnership may, on terms approved by the Partnership Committee, enter into
employment agreements with the Chief Executive Officer and other senior
management of the Partnership.
9.4 RELATED PARTY TRANSACTIONS. The fact that one of the Partners
is directly or indirectly interested in, or connected with, any person, firm or
corporation employed by the Partnership to render or perform a service, or to or
from whom the Partnership may purchase, sell or lease property, shall not
prohibit the Chief Executive Officer from causing the Partnership to employ such
person, firm or corporation, or from otherwise
33
dealing with him or it, provided (i) it is on terms no less advantageous to the
Partnership than are available from an unrelated third party and (ii) the Chief
Executive Officer has received approval of each such transaction in advance from
the Partnership Committee if the proposed transaction is material and is other
than in the ordinary course of business.
9.5 ACTS BY PARTNERS. No Partner shall take, or commit the
Partnership to take, any action, either in its own name in respect of the
Partnership or in the name of the Partnership, unless the Partnership Committee
has approved the same.
ARTICLE 10
DISSOLUTION AND LIQUIDATION
10.1 CONTINUANCE. The Partnership shall continue until its
expiration as provided in Section 1.4 hereof, or until it is earlier dissolved
by law or by the mutual consent of the Partners in writing or in accordance with
the provisions of this Article 10.
10.2 EVENTS CAUSING DISSOLUTION. The Partnership shall, as provided
below, dissolve upon, but not before, the first to occur of the following:
34
(a) Proceedings are commenced by or against any of the
Partners for any relief under any bankruptcy or insolvency law, or any law
relating to the relief of debtors, readjustment of indebtedness, reorganization,
arrangement or extension and such proceedings have not been dismissed, nullified
or otherwise rendered ineffective within 60 days after such proceedings have
commenced; or
(b) A decree or order of a court having jurisdiction in
the premises for the appointment of a receiver, liquidator, trustee or assignee
in bankruptcy or insolvency of any of the Partners, or of a substantial part of
its property, or for the winding-up or liquidation of its affairs, has been
entered, and such decree or order has remained in force undischarged for a
period of 60 days; or
(c) Any Partner shall make a general assignment for the
benefit of creditors; or
(d) The sale, condemnation, taking by eminent domain or
other disposition of all or substantially all of the assets of the Partnership
and the sale and/or collection of any evidence of indebtedness received in
connection therewith; or
(e) The conclusion of the term of the Partnership under
Section 1.4 hereof; or
35
(f) The withdrawal by a Partner from the Partnership
without the written consent of the other Partner; or
(g) The breach by a Partner of any of the covenants
contained herein, and, if such breach is remediable, such Partner fails to
remedy the breach within 45 days after written notice from either of the other
Partner to remedy such breach or, in the case of a dispute as to the existence
or occurrence of such breach, within 45 days after a final determination
(through arbitration or allowed judicial proceedings) that there has been a
breach; or
(h) The transfer (directly, indirectly or by operation of
law) of greater than a 50% equity interest in a Partner, except as specifically
allowed under Section 11.2 hereof; or
(i) Any Partner becomes Permit Blocked, as that term is
defined in the Surface Mining Control and Reclamation Act of 1977 ("SMCRA"), due
to the action or inaction of any Partner and such Permit Block continues to
exist for a period of twenty (20) days. Any Partner who becomes Permit Blocked
shall notify the other Partner within five (5) days of the occurrence of such
event.
10.3 ELECTION FOLLOWING EVENT CAUSING DISSOLUTION. Unless required
by applicable law, the occurrence of any event under
36
Section 10.2 hereof, other than under Sections 10.2(d) and (e) hereof, shall not
require the winding up of the Partnership if the Partners not initiating or
causing the event to occur (the "Electing Partner") make the election provided
for in Section 10.4 hereof. Such election to pursue an alternative to winding up
of the Partnership must be made by the Electing Partners within 60 days of the
Electing Partner's becoming actually aware of the occurrence of the event
causing dissolution. If (i) such election is not made by written notice to the
other Partner within the time required, (ii) the event under Section 10.2(d)
hereof occurs, or (iii) the event under Section 10.2(e) hereof occurs, then the
provisions of Section 10.5 hereof regarding liquidation and winding up of the
affairs of the Partnership shall govern.
10.4 ALTERNATIVE TO LIQUIDATION. To avoid the winding up of the
Partnership as provided in Section 10.3 hereof, the Electing Partner, if allowed
by applicable law, may elect (for events other than events under Sections 10.2
(d) or 10.2 (e) hereof) to have the Partnership continue as if such event had
not occurred; provided that, any waiver shall not be deemed to require such a
waiver in regard to any future or other event. In addition, any Partner may at
any time invoke the Buy-Sell provisions of Article 16 of this Agreement.
10.5 LIQUIDATION AND WINDING UP UPON DISSOLUTION. If the
Partnership is dissolved and if the Electing Partners do not make the election
provided for in Section 10.4 hereof, the Partnership
37
shall be wound up and liquidated in accordance with the requirements of law and
the following provisions:
(a) The right to wind up the Partnership's affairs and
to supervise its liquidation shall be exercised jointly by all Partners (the
"Liquidators").
(b) Upon dissolution, the Liquidators shall ensure that
an account is taken as soon as practicable of all property, assets and
liabilities of the Partnership.
(c) Each Partner shall pay to the Partnership all amounts
owed by it to the Partnership, together with such Partner's share of
contributions required by law and this Agreement to be made by the Partners for
the payment of liabilities.
(d) The assets and property of the Partnership or the
proceeds of any sale thereof, together with contributions received pursuant to
Section 10.5 (c) hereof, shall be applied by the Liquidators in accordance with
Section 10.6 hereof.
10.6 DISTRIBUTIONS UPON DISSOLUTION. Upon the dissolution of the
Partnership, the properties of the Partnership to be sold shall be liquidated in
an orderly fashion, and the proceeds thereof and any other property remaining
shall be distributed in kind as soon as practical, as follows:
38
FIRST: To the payment and discharge of all of the
Partnership's debts and liabilities (other than to
the Partners), to the necessary expenses of
liquidation, to a cash reserve for the completion of
the reclamation obligations of the Partnership and to
the establishment of a cash reserve which the
Partnership Committee determines to create for
unmatured and/or contingent liabilities and
obligations of the Partnership.
SECOND: To the payment and discharge of all of the
Partnership's debts and liabilities to Partners,
pro-rata in accordance with their respective unpaid
principal balances.
THIRD: To the Partners, pro rata in accordance with their
respective Capital Accounts on the date of
distribution (after adjustment for all items of
income and expense through that date).
If, upon the liquidation of the Partnership, or upon the liquidation of the
partnership interest of a Partner (in each case determined as provided in Treas.
Reg. 1.704-1(b) (2) (ii) (g)), after crediting all income upon sale of the
Partnership's assets
39
which have been sold, and after making all allocations provided for herein, a
Partner (the Partner whose partnership interest has been liquidated, if
applicable) has a negative Capital Account, such Partner shall be obligated to
contribute to the Partnership at or before the later to occur of (i) the close
of the Partnership's taxable year, or (ii) 90 days following such liquidation,
an amount equal to such negative Capital Account for distribution in accordance
with the terms of this Agreement.
ARTICLE 11
ASSIGNMENT AND TRANSFERS TO AFFILIATES
11.1 ASSIGNMENT OF PARTNER'S INTEREST. Except as provided in this
Agreement and except to provide for the Partners to pledge their Partnership
Interests to their lenders, a Partner may not withdraw, nor sell, assign,
transfer, pledge, grant a security interest in, encumber or otherwise dispose
of, all or any part of its interest in the Partnership. Any Partner may grant a
security interest in its right to receive distributions from the Partnership in
connection with a financing by such Partner. Any attempted withdrawal or
transfer not permitted by the terms of this Agreement shall be null and void ab
initio and is of no force and effect unless consented to in writing by all
Partners.
11.2 TRANSFER TO AFFILIATES. With the prior written consent of the
other Partner, a Partner ("Transferring Partner")
40
may sell, assign, transfer or dispose of all, or a portion, of its interest in
the Partnership to any of its Affiliates as defined below; provided that, the
other Partner ("Non-Transferring Partner") shall not unreasonably withhold
consent thereto if the Transferring Partner: (i) enters into a guarantee of the
liabilities and obligations of its Affiliate; (ii) indemnifies and holds
harmless the Non-Transferring Partner, in form and substance satisfactory to the
Non-Transferring Partner, against all costs and obligations of any nature
whatsoever, including, without limitation, obligations under the Code and the
Employee Retirement Income Security Act of 1974, as amended from time to time,
such that the Non-Transferring Partner shall be in the same position as it would
have been in if no such transfer had occurred, and (iii) satisfies the
Non-Transferring Partner that such transfer will not result in a termination of
the Partnership for Federal income tax purposes under Section 708(b) of the
Code. Any Affiliate to which such right, title and interest shall be sold,
assigned, transferred or disposed of shall execute a copy of this Agreement and
such other documents as are necessary to assume all the duties, liabilities and
obligations of the Transferring Partner concerning the Partnership. Thereupon,
the Affiliate shall be a Partner in succession to the Transferring Partner, and
the Transferring Partner shall cease to have any right, title or interest in, or
duties, liabilities or obligations in respect of, the Partnership to the extent
of any such transfer, except as provided above in this Section 11.2 or which may
arise by operation of law. For
41
purposes of this Agreement, the term "Affiliate" shall mean any individual,
corporation, partnership or other entity which, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, another individual, corporation, partnership or other entity. For
purposes of this Agreement the interest of any Affiliate assignee(s) of a
Partner shall be aggregated with such Partner and the original named Partner and
all Affiliate assignees of such Partner shall be treated as a single Partner.
ARTICLE 12
RELATIONSHIP WITH PARTNERSHIP
12.1 INFORMATION. Subject to any applicable restriction of law, all
Partners shall be fully and currently informed of the activities of the
Partnership. To the extent that there are any applicable laws or regulations
which would have the effect of limiting the right of a Partner to be so
informed, the other Partners shall use all reasonable efforts to obtain waivers
thereof in favor of the Partnership and the Partner so limited and, failing the
obtaining of such waivers, the Partners shall make such arrangements as shall be
practicable to preserve to the Partnership the benefits of the contracts or
projects to which any secrecy agreements or laws or regulations relate. Each
Partner shall not, except as required by law and except for disclosure to its
attorneys, accountants, and Affiliates (who
42
shall be bound by the confidentiality provisions of this Agreement), divulge to
any person any confidential or proprietary information concerning the business
of the Partnership.
12.2 GOOD FAITH OF PARTNERS AND AFFILIATES. Each of the Partners
shall act in good faith with respect to the Partnership in any matter which
involves the interests of any of its Affiliates. Without derogating from the
obligations of a Partner and its Affiliates to the Partnership and the other
Partner, a Partner shall not subordinate the interests of the Partnership to the
separate interests of itself or its Affiliates.
12.3 APPLICANT VIOLATOR SYSTEM. Each Partner represents and
warrants that such Partner, and its officers, shareholders, subsidiaries,
affiliates and any other entity that can be attributed to it under the
"ownership and control" regulations issued by the Office of Surface Mining
(collectively, "Partner Entities") are not currently permit blocked under the
Surface Mining Control and Reclamation Act of 1977 ("SMCRA"). No Partner will
allow to exist any violation of SMCRA or any comparable state law at any
operation of a Partner Entity that would cause the other Partner or its Partner
Entities to be permit blocked. Any Partner Entity which becomes permit blocked
under SMCRA or any comparable state law shall provide written notice of such
event to the other Partner within five (5) days and shall take any and all
actions necessary for the removal of such permit block within twenty (20) days;
provided, however, that if the
43
permit block does not then or thereafter adversely affect the other Partner (by
permit block or otherwise), the permit blocked entity may contest the permit
block in good faith and by appropriate legal proceedings.
ARTICLE 13
SCOPE OF PARTNERSHIP
13.1 NATURE OF OBLIGATIONS BETWEEN PARTNERS. Except as otherwise
provided in this Agreement, a Partner shall not act for, or assume any
obligation or responsibility on behalf of, any other Partner or the Partnership.
Each Partner hereby acknowledges, as among the Partners and the Partnership, a
personal responsibility for its respective Percentage Interest of the
liabilities and obligations of the Partnership incurred in accordance with the
terms of this Agreement, except as otherwise expressly provided in this
Agreement. In furtherance of the foregoing, if a Partner, pursuant to a final
judgment of a court of applicable jurisdiction, pays any amount on behalf or for
the account of the Partnership with respect to (i) any liability, obligation,
undertaking, damage or claim for which the Partnership shall or may, pursuant to
this Agreement or other contract or applicable law, be liable or responsible, or
(ii) making good any loss or damage sustained by, or paying any duty, cost,
claim or damage incurred by, the Partnership (such items referenced in clauses
(i) and (ii) above called "Liabilities"), then the Partnership shall reimburse
such Partner for the amount
44
so paid by that Partner. If the Partnership fails fully to reimburse the paying
Partner, the other Partner (a "Reimbursing Partner") shall indemnify the paying
Partner by paying to it an amount necessary to cause the Reimbursing Partner to
have incurred its Percentage Interest of the excess of (x) the aggregate
payments by the paying Partner as to such Liabilities over (y) the aggregate
reimbursement, if any, which the paying Partner has received from the
Partnership as to such payments. For purposes of this Article 13, all
Liabilities arising as a result of the insufficiency of any reserve established
in connection with the dissolution of the Partnership shall in each case be
deemed to be Liabilities of the Partnership.
13.2 INDEMNIFICATION.
(a) The Partnership shall indemnify, defend and hold
harmless each Partner and its employees, officers, directors and agents (the
"Other Indemnified Persons") from and against all loss, cost, liability and
expense which may be imposed upon or reasonably incurred by such Partner or
Other Indemnified Persons, including reasonable attorneys' fees and
disbursements and reasonable settlement payments, in connection with any claim,
action, suit or proceeding or threat thereof, made or instituted in which such
Partner or Other Indemnified Persons may be involved or be made a party by
reason of such Partner's being a Partner, or by reason of any action alleged to
have been taken or omitted by such Partner in such capacity, or by such Other
45
Indemnified Persons acting on behalf of such Partner or the Partnership, if such
Partner or Other Indemnified Person was acting in good faith and with reasonable
care in what it reasonably believed to be its scope of authority set forth in
this Agreement and in the best interests of the Partnership.
(b) Nothing in this Section 13.2 shall be construed to
require the Partnership to reimburse, defend, indemnify or hold harmless any
Partner or Other Indemnified Persons with respect to any loss, cost, liability
or expense in any circumstance in which this Agreement requires a Partner to
reimburse, defend, indemnify or hold harmless any other Partner or the
Partnership.
(c) Each Partner shall indemnify and hold harmless the
Partnership and the other Partner, and the Other Indemnified Persons, from and
against all loss, cost, liability and expense which may be imposed upon or
reasonably incurred by the Partnership, such other Partner, or Other Indemnified
Persons, including reasonable attorneys' fees and disbursements and reasonable
settlement payments, in connection with any claim, action, suit or proceeding or
threat thereof arising out of any breach by such indemnifying Partner of its
obligations and agreements under this Agreement.
(d) Promptly after receipt by a person or entity
indemnified under any provision of this Agreement (the
46
"indemnified Party") of notice of the commencement of any action against the
Indemnified Party, such Indemnified Party shall give notice to the person or
persons or entity or entities obligated to indemnify the Indemnified Party
pursuant to the provisions of this Agreement (the "Indemnifying Party"). The
Indemnifying Party shall be entitled to participate in the defense of the action
and, to the extent that it may elect in its discretion by written notice to the
Indemnified Party, to assume control of the defense and/or settlement of such
action; provided, however, that (i) both the Indemnifying Party and the
Indemnified Party must consent and agree to any settlement of any such action,
except that it the indemnifying Party has reached a bona fide settlement
agreement with the plaintiff(s) in any such action and the Indemnified Party
does not consent to such settlement agreement, such settlement agreement shall
act as an absolute maximum limit on the indemnification obligation of the
Indemnifying Party, and (ii) if the defendants in any such action include both
the Indemnifying Party and the Indemnified Party and if the Indemnified Party
shall have reasonably concluded that there are legal defenses available to it
which are in conflict with those available to the Indemnifying Party, then the
Indemnified Party shall have the right to select separate counsel to assert such
legal defenses and otherwise to participate in the defense of such action on its
own behalf, and the fees and disbursements of such separate counsel shall be
included in the amount which the Indemnified Party is entitled to recover
under the terms and subject to the conditions of this Agreement.
47
ARTICLE 14
GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Indiana. The Partners agree that if any
litigation occurs between the Partners regarding the Partnership, such action
shall be maintained only in the United States District Court for the Southern
District of Indiana, subject to applicable jurisdictional limitations. If due to
jurisdictional limitations, such action cannot be brought in the Southern
District of Indiana, such action may be maintained in any other Federal district
court in Indiana, or in an appropriate state court in Indiana.
ARTICLE 15
ARBITRATION
Any claim or dispute between the Partners which arises out of or
relates to this Agreement shall be arbitrable; provided that no matter requiring
the approval of the Partnership Committee shall be arbitrable. Further, any
Partner may bring an action in law or in equity for an injunction against a
violation of this Agreement pending resolution of the dispute by arbitration.
All such arbitrable matters shall be governed
48
solely by Exhibit "15" hereto. The pendency of any arbitration proceeding shall
stay any right of a Partner to take any action in regard to the other Partner
which is based upon a claim involved in the matter being arbitrated, but such
stay shall not affect the obligations of the parties hereunder to continue with
performance of this Agreement except to the extent of the matter being
arbitrated.
ARTICLE 16
BUY-SELL PROVISIONS
16.1 GENERAL BUY-SELL. As and when provided in Section 10.4 hereof, and
at any time after August 31, 1995, any Partner may implement the Buy-Sell
procedures set out in this Article 16. Any Partner (the "Initiating Partner")
shall have the right to notify the other Partner ("Non-Initiating Partners")
that it offers to sell all of the right, title and interest of the Initiating
Partner in and to the Partnership (the "Initiating Partner's Interest") on the
basis set forth in this Section 16.1 at a price equal to the greater of (i) the
Initiating Partners Percentage Interest of the product reached by multiplying
nine (9) times the average of the Adjusted Net Income of the Partnership for
each of the immediately preceding two completed fiscal years of the Partnership
and the then current fiscal year based upon the approved budget for that fiscal
year and actual experience to the date of such calculation or (ii) in the case
of
49
BBR, $77,915,250 and, in the case of Thoroughbred,$347,084,750, in each case, as
adjusted by changes in the Capital Account of the Initiating Partner after
January 1, 1999 and as reflected on the financial statements of the Partnership
prepared in accordance with generally accepted accounting principles
consistently applied (the "Sale Price"). As used in this Agreement, the term
"Adjusted Net Income" shall mean, with respect to each fiscal year, the net
income of the Partnership for such fiscal year, determined in accordance with
generally accepted accounting principles consistently applied, plus (i) interest
expense incurred during such fiscal year, plus (ii) extraordinary or
nonrecurring items of expense during such fiscal year, less (iii) extraordinary
or nonrecurring items of income during such fiscal year; in each case to the
extent such items are deducted from or included within income in determining net
income. Such notification by the Initiating Partner shall: (i) advise the
Non-Initiating Partner that the Initiating Partner is willing to sell Initiating
Partner's Interest; (ii) state the Sale Price; and (iii) give the Non-Initiating
Partner the option to purchase all right, title and interest of the Initiating
Partner in and to the Partnership (the "Initiating Partner's Interest") at the
Sale Price. Within 90 days after the date such notification is received by the
Non-Initiating Partner, the Non-Initiating Partner shall notify the Initiating
Partner that it:
(a) has elected to purchase the Initiating Partner's
Interest at the Sale Price; or
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(b) has elected not to purchase the Initiating Partner's
Interest.
If the Non-Initiating Partner does not so notify the Initiating Partner within
such 90 day period, the Non-Initiating Partner shall be deemed to have elected
not to purchase the Initiating Partner's Interest. If the Non-Initiating Partner
elects, or is deemed to have elected, not to purchase the Initiating Partner's
Interest then the Initiating Partner shall no sooner than 30 days (to provide
for a period of negotiation), but in no event later than 60 days, after such
notice of election is given, or is deemed to have been given, notify the
Non-Initiating Partner that the Initiating Partner elects not to sell its
Interest in the Partnership or invokes the provisions of Section 16.2 hereof
relative to the sale of the Initiating Partner's Interest. The closing of any
purchase and sale under this Section 16.1 shall take place at the principal
office of the Partnership within 90 days after the Non-Initiating Partner gives
notice to the Initiating Partner of its commitment to buy under this Section
16.1. At that closing, the Partnership and the Partners shall execute such
instruments as are appropriate to transfer the interest in the Partnership which
is being sold, free and clear of all liens and encumbrances, and to indemnify
the selling Partner as to all liabilities of the Partnership. At such closing,
the purchasing Partner shall pay the entire Sale Price in cash to the selling
Partner.
51
16.2 CONVERSION OF PARTNERSHIP TO CORPORATION AND SALE OF INITIATING
PARTNER'S SHARES IN NEW CORPORATION. If the Initiating Partner invokes the
provisions of this Section 16.2 pursuant to Section 16.1 hereof, the following
procedures shall be followed, all at the sole cost and expense of the Initiating
Partner:
(a) The Partnership shall be converted to a corporation
under the laws of the State of Indiana, with the Partners being shareholders
with the same interests as they had under the Partnership. The terms of the
Articles of Incorporation and By-Laws of the new corporation shall be those
which are customary in Indiana for a corporation of this type and shall be
agreed to by all Partners and consistent with the rights and privileges set out
in this Agreement, with any dispute settled by arbitration under Article 15
hereof. The conversion of the Partnership shall be accomplished in the most tax
efficient manner available in order to minimize tax liability to the Partners.
(b) The new corporation shall register for public sale
all of the outstanding shares of stock of the new corporation under and in
compliance with all applicable federal and state securities laws.
(c) Prior to the registration and initial public offering
of the shares of stock of the Initiating Partner in the new corporation as
described in Section 16.3(d) hereof, the
52
Initiating Partner shall request that the Non-Initiating Partner direct, in
writing, the Initiating Partner to market to the public either (i) all of the
shares of stock of the Initiating Partner in the new corporation and
constituting it's Percentage Interest of the total outstanding shares of the new
corporation, or (ii) a portion of the shares of stock of the Initiating Partner
in the new corporation, constituting 19% of the total outstanding shares of the
new corporation. The Non-Initiating Partners shall respond to such request, in
writing, within 10 days. If the Non-Initiating Partner fails to respond, it
shall be deemed to have directed the Initiating Partner to offer all of the
Initiating Partner's shares. If the Non-Initiating Partner directs the
Initiating Partner to market only 19% of the total outstanding shares of the new
corporation, the Non-Initiating Partners shall then be obligated to purchase
directly from the Initiating Partner all of the shares of stock in the new
corporation held by the Initiating Partner which are not offered to the public
(the "Required Purchase"). The purchase price per share to be paid by the
Non-Initiating Partner to the Initiating Partner in any such Required Purchase
shall be the average price per share realized in the initial public offering of
19% of the total outstanding shares of the new corporation owned by the
Initiating Partner, net of, commissions (the "Purchase Price"). The Purchase
Price for all of the remaining shares owned by the Initiating Partner shall be
paid by the Non-Initiating Partner to the Initiating Partner, in cash, within 15
days of the completion of the initial public offering.
53
(d) The shares of stock of the Initiating Partner in the
new corporation to be marketed pursuant to Section 16.2(c) hereof, shall be
marketed by an underwriter chosen by the Initiating Partner on a "best efforts"
basis, or such other basis as the Initiating Partner may approve. The Initiating
Partner shall accept any price for the shares so offered.
(e) The conversion of the Partnership to a corporation
and the completion of such offering shall occur within 240 days of the date the
Initiating Partner elects to invoke the provisions of this Section 16.2.
16.3 (a) PURCHASE OF PARTICIPATING RIGHTS. Subject to the time
limit set out in the following sentence, as extended pursuant to subsection (c),
Thoroughbred may irrevocably notify BBR in writing (a "Participating Rights
Purchase Notice") of its intent to acquire from BBR certain voting rights of BBR
in the Partnership (the "Participating Rights"), by replacing the list of "Major
Decisions" set out on Exhibit 9.1 to this Agreement with the list of "Major
Decisions" set out on Exhibit 16.3 to this Agreement. If a Participating Rights
Purchase Notice is given at any time during the period commencing on February
26, 1999 and ending 36 months from such date, the transfer of the Participating
Rights and the adoption of the list of Major Decisions set out on Exhibit 16.3,
shall be effective upon the payment of an amount to be negotiated in good faith
by the Partners which shall be considered a premium over the Interest Purchase
Price as defined in Section 16.3(b) hereof and shall
54
further reflect the fact of gaining control and marketability of the Partnership
(typically between 25% and 40% of the Interest Purchase Price of the
partnership) (the "Participating Rights Purchase Price") in immediately
available funds by wire transfer to an account designated by BBR. Upon the
payment of the Participating Rights Purchase Price, which shall be made within
ten (10) days of the giving of a Participating Rights Purchase Notice, BBR and
Thoroughbred shall execute an amendment to this Agreement substituting the list
of major Decisions set out on Exhibit 16.3 for the list set out on Exhibit 9.1.
No other right, interest or privilege of BBR shall be transferred, waived or
relinquished by BBR in connection with the transfer of the Participating Rights.
(b) PURCHASE OBLIGATION. Without limiting the obligation
of Thoroughbred to complete the acquisition of the Participating Rights and pay
the Participating Rights Purchase Price in the time period specified above, if a
participating Rights Purchase Notice is given, BBR in its sole option, at any
time during the twelve (12) month period following the giving of the
Participating Rights Purchase Notice, may irrevocably notify Thoroughbred in
writing (a "Sale Notice") that BBR elects to sell to Thoroughbred the BBR
Partnership Interest for the sum of seventy-seven million nine hundred sixteen
thousand nine hundred fifty dollars ($77,916,950.00)(the "Interest Purchase
Price"). A Sale Notice shall be binding upon both BBR and Thoroughbred. If a
Sale Notice is given, BBR shall transfer to Thoroughbred, on
55
the tenth (10th) business day following the Sale Notice, the BBR Partnership
Interest. On such day (i) BBR shall deliver an assignment of all right, title
and interest of BBR in and to the Partnership and (ii) Thoroughbred shall
deliver to BBR the Interest Purchase Price in immediately available funds by
wire transfer to an account designated by BBR. If BBR so elects and gives a Sale
Notice within ten (10) days of Thoroughbred giving a participating Rights
Purchase Notice, the purchase of the Participating Rights and the BBR
Partnership Interest shall be accomplished by a purchase by Thoroughbred of the
unencumbered capital stock of BBR for the Interest Purchase Price plus the
Participating Rights Purchase Price, on terms and conditions negotiated in good
faith by the parties in the negotiation of the Participating Rights Purchase
Price. At the time of the purchase of the capital stock of BBR, BBR shall only
consist of its ownership interest in the Partnership. The obligation to pay the
Participating Rights Purchase Price and the Interest Purchase Price are separate
and one shall not reduce or offset the other.
(c) TIME EXTENSION. If at the end of the 36 month period
referenced in Section 16.3(a) hereof, Thoroughbred requires an extension of the
time period necessary to maintain the rights and obligations of Section 16.3(a)
and (b) hereof, the parties agree to negotiate in good faith toward an extension
of the time period necessary to maintain such economic rights and obligations.
Thoroughbred shall not be obligated to pay any consideration to BBR for such an
extension.
56
ARTICLE 17
NOTICES
17.1 ADDRESSES. All notices, consents, elections, requests,
reports, demands and other communications hereunder shall be in writing and
shall be personally delivered or mailed by registered or certified, first-class
mail, postage prepaid, or sent by attested facsimile transmission or by a
reputable overnight courier service such as. Federal Express,
to BBR;
Black Beauty Resources, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman
to Thoroughbred:
Thoroughbred, L.L.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chairman
or to such other address or to such other person as a Partner shall have last
designated by notice to the other Partners.
17.2 EFFECTIVE DATE. All notices, consents, elections, requests,
reports and other documents authorized or required to be given pursuant to this
Agreement shall be effective as of the date received by the recipient or
addressee for purposes of
57
calculating the time within which the other Partners are obligated to respond.
If a Partner refuses to accept delivery of any notice sent in accordance with
Section 17.1 hereof, such Partner shall nevertheless be deemed to have received
such notice for purposes of this Section 17.2 on the date such refusal first
occurred.
ARTICLE 18
MISCELLANEOUS
18.1 BINDING ON SUCCESSORS. Except as otherwise provided in this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
Partners and their successors and assigns.
18.2 AMENDMENTS. This Agreement shall not be amended or modified
except by a written instrument executed by all Partners.
18.3 WAIVER AND CONSENT. No consent or waiver, express or implied,
by a Partner to or of any breach or default by the other Partners in the
performance of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by the
other Partner of the same or any other obligation of such Partners hereunder.
Failure by any Partner to complain of any act or failure to act of the other
Partner or to declare any such other Partner in default, irrespective of how
long such failure continues, shall not constitute a waiver by such Partner of
its rights hereunder.
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18.4 LIMITATION ON RIGHT TO PURCHASE PARTNERSHIP INTEREST.
Notwithstanding anything in this Agreement to the contrary, the right of a
Partner to purchase the Partnership Interest of the other Partner shall cease 20
years and 11 months after the death of the last survivor of the descendants
living as of the date hereof of ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇, immediate past President of
the United States of America.
18.5 WAIVER OF DISSOLUTION UNDER THE UNIFORM PARTNERSHIP ACT. Any
dissolution of the Partnership shall occur only as provided in Article 10
hereof, and each Partner hereby waives and renounces its rights under the IUPA
to seek a court decree of dissolution, to seek the appointment of a liquidator
of the Partnership, and to seek a partition of any Partnership property.
18.6 RELATIONSHIP OF THE PARTNERS. Nothing herein shall be
construed to authorize a Partner to act as general agent for the other Partner.
18.7 FURTHER ASSURANCES. The Partners shall execute and deliver
such further instruments and do such further acts and things as may be required
to carry out the intent and purpose of this Agreement.
18.8 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is invalid
59
or unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
18.9 AGREEMENT IN COUNTERPARTS. This Agreement may be executed in
as many counterparts as may be deemed necessary and convenient. Each counterpart
when so executed shall be deemed an original, but all counterparts shall
constitute one and the same instrument.
18.10 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto relative to the Partnership. Exhibits 8.4, 9.1, 15
and 16.3 are incorporated into this Agreement by reference.
IN WITNESS WHEREOF, the parties hereto have duly caused the execution
of this Agreement by their duly authorized officers, as of the day and year
first above written.
BLACK BEAUTY RESOURCES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Title: President
60
THOROUGHBRED, L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Title: Vice President
61
EXHIBIT LIST
9.1 Major Decisions
15 Arbitration
16.3 Major Decisions
62
EXHIBIT 16.3
AMENDED MAJOR DECISIONS
1. Any amendment to, or modification of, any term or provision of the
Partnership Agreement.
2. Any contract or arrangement between the Partnership, on the one hand,
and one Partner or an Affiliate of such Partner, on the other hand.
3. The incurrance of any indebtedness of the Partnership outside of the
ordinary course of business or execute any guarantee which secures any
indebtedness of any Partner or any Affiliate of any Partner.
4. Approval of all significant tax returns of the partnership before
filing.
5. Any change or modification of the policy or practices of the
Partnership regarding distributions to Partners.
6. Any merger, consolidation, dissolution, wind-up or any sale of all or a
substantial portion of the assets of the Partnership, and the decision as to
whether any of the Partnership assets are to be distributed to the Partner "in
kind" in connection with any dissolution or winding up of the business of the
Partnership.
7. Any decision to file a voluntary petition in bankruptcy.
8. Any action taken which would not proportionally benefit all Partners
and would materially impair the value of the interest of any Partner holding a
minority interest in the Partnership.
(BLCKBEAUTY AGRMT.)
EXHIBIT "9.1"
MAJOR DECISIONS
1. Any change in, addition to, or exclusion from, the purposes of the
Partnership, or the setting up or substantial alteration or divestment
of any major business activity or activities of the Partnership.
2. The approval of, and any material change in, the annual budget and
business plan of the Partnership.
3. Any specific capital project or capital expenditure not covered by an
approved budget and business plan, or any decision requiring the
Partners to make additional capital contributions to the Partnership.
4. Any contract or other commitment which cannot be cancelled by the
Partnership without penalty and requiring, or potentially requiring,
the expenditure of more than $25,000 or having, or potentially having,
a material impact upon the business of the Partnership, except
contracts or other commitments in respect of which authority to commit
the Partnership shall have been approved in an annual budget and
business plan or is delegated to the Chief Executive Officer by general
or specific action of the Partnership Committee.
5. Any contract or arrangement between the Partnership, on the one hand,
and one Partner or an Affiliate of such Partner, on the other hand, if
such arrangement is subject to Partnership Committee approval under
Section 9.4 of the Agreement.
6. The commencement or settlement of litigation or the settlement of any
claim or environmental proceeding involving or potentially involving
$25,000 or more in value at issue plus costs.
7. The appointment of any person as Chief Executive Officer or the removal
or dismissal of any person holding that office; or the establishment of
salary and employee benefits for the Chief Executive Officer; or the
approval of any contract of employment for the Chief Executive Officer.
8. The appointment of any person to, or the removal or dismissal of any
person from, a senior managerial position with the Partnership; the
designation of which positions constitute senior managerial positions;
or the establishment of salaries and employee benefits for the holders
of such positions.
9. Any borrowing by the Partnership, other than the incurrence of trade
payables in the ordinary course of business, the imposition of any
mortgage or other encumbrance on assets of the Partnership for any
financing transaction, including any incurrence of a contingent
liability with respect thereto and any lease commitment which is either
noncancelable or only cancelable at a penalty or the incurrence of
liabilities approved in an annual budget and business plan. Also, any
decision by the Partnership to prepay any long-term indebtedness of the
Partnership or a loan by a Partner to the Partnership.
10. Any sale or other disposal of one or more capital assets of the
partnership having an aggregate value on the books of the partnership
in excess of $100,000 in any one year.
11. Any matter relating to company, corporate or partnership titles, names
or trade names, designations; descriptions, designs, emblems or
insignia used or to be used by the Partnership.
12. Adoption or amendment of pension or other employee benefit plans.
13. Approval of all significant tax returns of the Partnership before
filing.
14. The approval of any labor contract, amendment thereto or the settlement
of any significant work stoppage, except for the acceptance of the
application of the JOBS MOU pursuant to the terms of the Consent and
General Release dated as of January 1, 1999 between the Partners.
15. Questions of business ethics.
16. Any merger, consolidation, dissolution, wind-up or any sale of all or a
substantial portion of the assets of the Partnership, and the decision
as to whether any of the Partnership assets are to be distributed to
the Partner "in kind" in connection with any dissolution or winding-up
of the business of the Partnership.
17. Acquisition by the Partnership of any interest in any corporation,
partnership joint venture or other unincorporated association.
18. The determination whether the Partnership should join any industrial
bargaining group or trade association having similar functions.
19. The voting of any interest of the Partnership in any other entity,
including, without limitation, United Minerals, LLC, Sugar Camp Coal,
LLC and Enterprise Mine, LLC.
20. The establishment of any "reserve" under Section 8.1 of the Partnership
Agreement in connection with determining the Net Cash Flow of the
Partnership.
21. Any other matter which may have a material affect on the business or
prospects of the Partnership, whether or not enumerated in this list of
Major Decisions.
EXHIBIT 15
ARBITRATION AGREEMENT
I. MATTERS SUBJECT TO ARBITRATION
Any claim or dispute between any of the Partners which arises out of or
relates to that certain Amended and Restated Partnership Agreement
between BBR and Thoroughbred dated March, 1999 ("Partnership
Agreement"), other than certain matters excluded under Article XV shall
be arbitrable. The Partners hereby agree that, as to all arbitrable
claims or disputes, these provisions provide the exclusive remedy(ies)
and bar any court proceeding on the same question; provided that, any
Partner may pursue any judicial remedy in any court having jurisdiction
to compel arbitration or to enforce or appeal any decision, award,
remedy or sanction of the arbitration panel ("Panel") pursuant to
Article VIII, X or XI hereof. Unless prohibited by applicable law, the
Panel shall decide whether a claim or dispute is arbitrable under the
Agreement.
II. CHOICE OF FORUM AND LAW
A. Choice of Forum
Unless otherwise agreed in writing by the Partners, the
arbitration and all meetings and hearings relative thereto
shall be held in Evansville, Indiana.
B. Choice of Law
All decisions, awards, orders, proceedings and procedures
pursuant to this Agreement shall be governed, as a matter of
contract, by Articles I through XVIII. Where such a proceeding
or procedure is not addressed by this Agreement, the Federal
Arbitration Act as presently in effect shall apply, as a
matter of contract. To the extent not in conflict with either
this Agreement or
the Federal Arbitration Act, the law of the State of Indiana,
including its substantive law, shall apply to such decisions,
awards, orders, proceedings and procedures.
III. ARBITRATORS
A. Number and Method of Selection
Three arbitrators shall comprise the Panel for any proceeding
or procedure under this Agreement. The Partner invoking
arbitration shall include in the notice thereof a list of the
names, business addresses, and affiliations of three neutral
arbitrators acceptable to it. Upon receipt of that notice,
each of the other Partners, in their respective answers
thereto shall include, as provided in Article VI. A, the
names, business addresses and affiliations of three neutral
arbitrators acceptable to it. Upon receipt of that answer, the
Partner invoking arbitration shall contact the other Partners,
and they shall attempt to mutually select three neutral
arbitrators. Upon request by any Partner, the Partners shall
participate in interviewing each proposed arbitrator. If the
Partners fail to agree on the selection of one or more
arbitrators within 14 days from the date the Partner invoking
the arbitration receives the other Partners' answers, then any
Partner may refer the selection of those Panel members not so
selected to a judge of the Federal District Court for the
Southern District of Indiana, Evansville Division. When the
three arbitrators are finally selected, they shall promptly
notify each Partner of their respective mailing addresses and
affiliations.
B. Minimum Qualification
The Panel shall consist of at least one arbitrator who, at the
time of his/her selection, is an attorney currently licensed
to actively practice in at least one state or is a retired
federal or state judge.
C. Selection of Chair
The Panel shall be chaired by an attorney/judge who meets the
minimum qualification in Article III.B. If more than one Panel
member is such an attorney/judge, a majority of the Panel
shall determine which attorney/judge shall chair the Panel.
D. Vacancies
If any Panel member is unable or unwilling to continue to
serve at any time prior to the issuance of the Panel's
decision and award, the remaining two Panel members shall
mutually select a replacement. Upon their failure to make that
selection within 7 days of such vacancy, any Partner may
request a judge of the Federal District Court for the Southern
District of Indiana, Evansville Division, to select that
replacement.
E. Compensation
Whoever selects an arbitrator shall determine, at the time of
selection, that arbitrator's compensation. The compensation of
the arbitrators shall be borne equally by the Partners, unless
otherwise apportioned by the Panel as provided in Article XI.
F. Oath
At the Panel's first meeting, and in any event before
proceeding with the preliminary hearing described in Article
VI.C, each arbitrator shall take the oath of office, which
shall be in the form of the "Arbitrator's Oath" set forth in
the American Arbitration Association's then "Notice of
Appointment."
1. Powers
The Panel shall have the powers stated in this Agreement, as
well as any power reasonably necessary to exercise or
implement any such stated powers. All powers of the Panel
shall be exercised by a majority of the Panel.
G. No Liability to Any Partner
The Partners hereby agree that no arbitrator shall be liable
to any Partner for any act or omission in connection with any
arbitration, proceeding or procedure conducted under, or any
decision, award or order with respect to, this Agreement.
IV. USE AND COMPENSATION OF CONSULTANTS
Whenever the Panel desires, it may use one or more consultants to
enable it to more clearly understand any technical, financial or
scientific matters related to any claim or dispute at issue; provided
that, the cost thereof shall not exceed an amount previously agreed to
in writing by the Partners. In making its decision and award, the Panel
may fully or partially use, or may disregard, any information or report
prepared or developed by any such consultant. The cost of all
consultants shall be borne equally by the Partners, unless otherwise
awarded by the Panel as provided in Article XI.
V. REPRESENTATION BY COUNSEL
Any Partner, at its sole election, may be represented by counsel of its
choice at any and all times during the arbitration.
VI. PROCEDURES
A. Commencement
Any Partner may invoke arbitration by notifying the other
Partner, within one year of the date the claim or dispute
first arose. The date such notice is mailed shall be the
effective date the arbitration is invoked for all purposes of
this Agreement. In addition to listing its three proposed
neutral arbitrators in that notice as required by Article
III.A, the notice shall state with reasonable specificity each
claim or dispute and the relief sought. Within 20 days of the
receipt of the notice, the receiving Partner shall send its
written answer thereto by certified mail, return receipt
requested, to the other Partner. Each answer shall include the
list of that answering Partner's three proposed neutral
arbitrators and a reasonably specific statement of its view of
each such claim or dispute, including all defenses, offsets,
counterclaims, and any relief sought which arise out of or
relate to each such claim or dispute.
B. Closed Hearings
All proceedings under this Agreement, including the
preliminary and final hearings, shall be closed to the public,
including, without limitation, the print and electronic media,
unless otherwise agreed to in writing by the Partners.
C. Preliminary Hearing
1. Setting the Hearing: Prehearing Statement
Following the selection of the third member of the
Panel and receipt of the other Partner's answer, the
Panel shall set a date, time and place
for a preliminary hearing and shall so notify the
Partners in writing. Such notice shall be submitted
to each Partner within 10 days of the date the third
member of the Panel is selected. The preliminary
hearing shall occur no sooner than 14 days and no
later than 28 days from the date such notice is
received by each Partner. Not later than 2 days prior
to the commencement of the preliminary hearing, each
Partner shall submit a copy of its proposed
prehearing report to each Panel member and to the
other Partner. Each prehearing statement shall
identify:
a. every claim or dispute to be arbitrated;
b. every legal issue involved in the
arbitration;
c. every relevant fact and legal issue which
can be stipulated;
d each witness that Partner intends to call at
the final hearing, a summary of that
testimony, and each document that Partner
intends to offer into evidence at that
hearing, but such matter shall be subject to
revision as a result of any second
preliminary hearing requested by a Partner
and deemed warranted and scheduled by the
Panel; and
e. all discovery that Partner intends to
undertake in accordance with Article VII.
A Partner may amend its proposed prehearing report at
the preliminary hearing. After the close of the last
preliminary hearing, any change to a proposed
prehearing report shall be within the Panel's
discretion; provided that, no such change shall be
permitted by the
Panel less than 15 days prior to the commencement of
the final hearing, or at any time without prior
written notice to, and an opportunity to object by,
the Partners.
2. Panel's Duties at Preliminary Hearing
The Panel shall perform the following tasks,
seriatim, at the preliminary hearing:
a. require each Panel member, if not previously
sworn, to take the oath of office;
b. identify every claim or dispute to be
arbitrated;
c. identify every stipulated fact and issue of
law;
d. identify the discovery each Partner intends
to undertake and establish a date for its
completion in accordance with Article VII,
which date shall not be less than 20 days
nor more than 60 days from the date of the
Panel's initial preliminary hearing report;
e. determine the matters in Article VI.C.3
relative to the Partners' final hearing
briefs;
f. set the date, place, time and duration for
the final hearing, which shall be consistent
with Article IX.B and which date shall not
be less than 30 days nor more than 60 days
from the date discovery is required to be
completed as provided in Article VI.C.2.d;
g. establish an agenda for the final hearing;
and
h. issue its initial or final preliminary
hearing report, as the case may be.
Any objection to the Panel's actions on any of these
tasks shall be raised by a Partner at the preliminary
hearing, followed by notice to the Panel and the
other Partner within 5 days after the conclusion of
that hearing, failing which such Partner shall be
conclusively deemed to have waived any objection
thereto. If, on motion by a Partner, the Panel
believes a second preliminary hearing is warranted,
the Panel may schedule such a hearing so long as that
hearing does not increase by more than 10 days what
otherwise would have been the duration of the entire
arbitration procedure under this Agreement had no
second preliminary hearing ever been held.
Within 15 days from the completion of the last
preliminary hearing, the Panel shall send a written
copy of the Panel's final preliminary hearing report
to each Partner by certified mail, return receipt
requested. This report shall contain the Panel's
decisions with respect to tasks a. through h. in
Article VI.C.2. The Panel may amend this report, but
no such amendment shall occur less than 15 days prior
to the commencement of the final hearing, or at the
time without prior written notice to, and a
reasonable opportunity to object by, each Partner.
3. The Partners' Final Hearing Briefs
Each Partner shall submit to the Panel and to the
other Partner its final hearing brief on or before
the date set by the Panel in its final preliminary
hearing report, which date shall be no later than 20
days prior to the commencement of the final hearing.
In its final
preliminary hearing report, the Panel shall determine
what this brief shall address and shall establish a
page limitation therefor, but, unless mooted by the
second preliminary hearing, each brief shall:
a. identify all witnesses, by name, address,
title and affiliation, that Partner intends
to call at the final hearing;
b. contain a summary in reasonable detail of
the nature of each such witness' testimony;
and
c. include by way of attachment a photocopy of
each document that Partner intends to
introduce at the final hearing.
Any witness not so identified shall not be permitted
to testify at the final hearing, and any photocopy of
a document not so attached shall not be admitted into
evidence at that hearing. Within 7 days of its
receipt of each other Partner's final hearing brief,
each Partner shall submit to the Panel and to the
other Partner an amendment to its final hearing
brief, which shall contain all objections that
Partner has to the authenticity of any of the
photocopied documents attached to the other Partners'
final hearing briefs. Any such photocopied document
not so objected to shall be deemed authenticated for
purposes of the final hearing.
VII. DISCOVERY AND SUBPOENAS
If there are material facts in dispute, any Partner may pursue any
method of discovery permitted by the Federal Rules of Civil Procedure,
notwithstanding Rule 81(a)(3) thereof; provided that, in no event shall
the duration of all discovery, including all discovery requests and
responses, exceed the time established by the Panel pursuant to Article
VI.C.2.d. Discovery costs may be awarded by the Panel as provided in
Article XI. The Panel at any time may issue subpoenas for the
attendance of witnesses and the production
of books, records, documents and other evidence for any proceeding or
procedure under this Agreement. The Panel may issue a discovery order
to reasonably protect a Partner's competitive and confidential
information.
VIII. INTERLOCUTORY POWERS OF PANEL
A. Decisions
The Panel may decide any matter in advance of the final
hearing, including, without limitation, any matter which may
be dispositive of the claim or dispute being arbitrated.
B. Hearings and Sanctions
Notwithstanding anything in this Agreement to the contrary, if
a Partner fails to fully and timely comply with this Agreement
or with any reasonable order of the Panel, the Panel may hold
a hearing on the default. The defaulting Partner shall be
notified by the Panel of the date, time, location and nature
of that hearing and of the sanctions the Panel may impose.
Such notice shall be sent not less than 10 days prior to the
commencement of the hearing. If the defaulting Partner fails
to appear at that hearing, the Panel may conduct an ex parte
hearing, then or later, which it deems desirable to remedy
such default. Following any such ex parte hearing, the Panel
shall notify each Partner in writing of its decision and
award. Such award shall be consistent with Articles X and XI.
IX. FINAL HEARING
A. Final Prehearing Order
Not later than 15 days prior to the commencement of the final
hearing, the Panel shall submit a copy of its final prehearing
order to each Partner. The final prehearing order shall:
1. resolve any matter not finalized in the Panel's final
preliminary hearing report, as originally issued or
amended; and
2. finalize each of the matters set forth in the
Partners' final hearing briefs, as originally
submitted or amended.
B. Procedure
The final hearing shall occur in one continuous session over a
period not to exceed 5 days, with no recess in excess of 15
hours except for Saturdays, Sundays and Holidays. The Panel
shall conduct the final hearing in accordance with its final
prehearing order. A transcript and an electronic recording
shall be made of all testimony and proceedings at the final
hearing. The Panel shall arrange for a reporter to make such a
transcript and recording. Except as provided in the last
paragraph of Article VI.C.3, the Panel shall consider all
evidence presented by a Partner which is relevant to any claim
or dispute being arbitrated and which is not unduly
repetitious of any previous evidence presented by that
Partner. No other rules of evidence shall apply. The Panel
chair shall administer the oath to each witness before the
witness testifies. The Panel may require that each Partner
submit a short opening and/or closing brief. At the close of
all evidence, the Partners shall be given a reasonable period,
but not to exceed 3 days, in which to make one final attempt
to settle all claims and disputes being arbitrated before the
Panel issues its decision and award as provided in' Article X.
Only evidence offered and admitted at the final hearing shall
be considered by the Panel hi reaching its decision and award.
X. THE PANEL'S DECISION AND AWARD
Not later than 14 days after the completion of the final hearing, the
Panel shall submit to each Partner a copy of its written decision and
award on each arbitrated claim and dispute. The decision and award
shall be concise, and shall include findings of fact, conclusions of
law, and a reasoned decision. It also shall include the remedies in
Article XI which are awarded, including the time and method for payment
of all awards. All members of the Panel shall sign the decision and
award. However, if a Panel member dissents in whole or in part from the
decision and award, that member shall so indicate by appropriate
notation thereon or by a separate signed, written dissenting opinion
attached thereto within that same 14-day period. The decision and award
shall be final, and judgment may be entered thereon in any court having
jurisdiction thereof. Where required by applicable law, the decision
and award shall be acknowledged, and a copy of the oaths of each Panel
member shall be attached thereto.
XI. REMEDIES
The Panel may grant, award, modify or vacate any remedy deemed
appropriate, including, without limitation, specific performance,
damages, costs and expenses of the arbitration proceeding, and pre- and
post-decision and award interest. The Panel shall not award any
punitive damages. The actual damages, the costs and expenses of the
arbitration proceeding, and interest shall be separately identified in
the Panel's decision and award. The Panel may apportion such damages,
costs, expenses and interests between or among the Partners as it deems
equitable.
XII. COMMUNICATIONS BETWEEN THE PARTNERS AND THE PANEL
No oral communications between a Partner and any Panel member shall
occur unless the other Partner is present during that communication.
Written communication between a
Partner and any Panel member is permissible only if the other Partners
and all other Panel members timely receive a copy of such written
communication.
XIII. NOTICES
All notices and correspondence from any member of the Panel to a
Partner, or from a Partner to the other Partners or to any member of
the Panel, shall be in writing and shall be sent by certified mail,
return receipt requested. If given to a Partner, such notice and
correspondence shall be sent to the addressee's mailing address stated
in Section 17.1 of the Partnership Agreement or to such address as
otherwise designated. If given to a Panel member, it shall be sent to
the mailing address provided by that member to the Partners as provided
in Article III.A. Except for the one-year deadline for invoking
arbitration in Article VI.A, and except as otherwise may be provided in
this Agreement, all notices and correspondence shall be effective and
deemed delivered when received by the addressee or any employee or
agent thereof.
XIV. COMPUTATION OF TIME LIMITS
All time limits set forth in this Agreement include Saturdays, Sundays
and Holidays, except where the last day falls on one of those days. In
that event, such time limit shall be extended to include the next
weekday immediately following that last day which is not a Saturday,
Sunday or Holiday.
XV. WAIVER
If a Partner participates in any arbitration proceeding or procedure
with actual or constructive knowledge that any provision or requirement
of this Agreement has not been complied with, and fails to timely
object thereto in writing to the Panel, that Partner shall be deemed to
have waived the right to object to such noncompliance.
XVI. APPEAL
Any appeal of the Panel's decision and award to any court having
jurisdiction thereof shall be governed exclusively by this Article XVI.
A. Time for Appeal
No such appeal from the Panel's decision and award shall be
timely unless filed with the clerk of the court on or before
the 15th day following the date of the appealing Partner's
receipt of that decision and award; provided that, if the
appeal is predicated on corruption or fraud, it shall be made
on or before the 15th day following the first date such
grounds are known or should have been known.
B. Grounds for Appeal
1. Vacation
The Panel's decision and award shall be vacated only
if:
a. it was procured by corruption, fraud or
other undue means; or
b. there was partiality or misconduct by two or
more Panel members, which substantially
prejudiced the appealing Partner; or
c. the Panel exceeded its powers under this
Agreement, which substantially prejudiced
the appealing Partner; or
d. the Panel failed to follow some of the
procedures in this Agreement, including,
without limitation, those in Article VI, or
failed to meet some of the time limits set
forth in this Agreement, and that failure
substantially prejudiced the appealing
Partner.
2. Modification
The Panel's decision and award shall be modified only
if:
a. there was an evident material miscalculation
of figures contained in the decision and
award, or an evident material mistake in the
description of any person, thing or property
referred to therein; or
b. the decision and award included a matter not
submitted to the Panel, but such
modification shall apply only to that
matter; or
c. the reason for the modification is to give
full force and effect to the Panel's
decision and award.
XVI. SURVIVAL OF THE TERMS AND CONDITIONS
The terms and conditions of this Agreement shall survive the
termination or expiration of the Partnership Agreement to the extent
necessary for their complete enforcement and for the full protection of
the Partner in whose favor they run.
XVII. SEVERABILITY
If any portion of this Agreement is unenforceable for any reason, the
remainder of this Agreement shall be severed from such portion, and, as
severed, shall be binding on and enforceable against the Partners;
provided that, if Article VII is unenforceable in whole or in
substantial part, this Agreement shall automatically terminate and
shall be unenforceable against the Partners.