Exhibit 2.4
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 3,
1998 by and among AEI Resources, Inc., a Delaware corporation ("Parent"),
Zeigler Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of Parent (the "Purchaser"), and Zeigler Coal Holding Company, a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the parties hereto desire that the Purchaser commence a
tender offer (the "Offer") to purchase all of the shares of Common Stock, par
value $.01 per share, of the Company (the "Common Shares") in accordance with
the terms of this Agreement; and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth below (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "GCL") and upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding Common Share not owned directly or indirectly by Parent or the
Company will be converted into the right to receive $21.25 per Common Share, in
cash (the "Merger Consideration"); and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
acquisition of the Company by Parent pursuant to the Offer and the Merger and
also to prescribe various conditions to the Offer and the Merger; and
WHEREAS, certain capitalized terms used in this Agreement have the
meaning as set forth or referred to in Article X hereof.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
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(a) Provided that this Agreement shall not have been terminated in
accordance with its terms and none of the events set forth in Paragraphs (a)
through (f) of Annex I hereto shall have occurred or be existing, no later than
two (2) business days after the public announcement of
the terms of this Agreement, the Purchaser shall commence the Offer, in
accordance with the requirements of Regulations 14D and 14E promulgated under
the Exchange Act, and any applicable State securities laws, to purchase all of
the issued and outstanding Common Shares for the Offer Price net to the seller
thereof in cash, provided, however, that the Purchaser shall use its best
efforts to commence the Offer as soon as practicable after the public
announcement of the terms of this Agreement, but in no event later than two
business days after such public announcement. The Offer shall expire and
terminate on the twentieth (20th) business day from the commencement of the
Offer (the "Expiration Date"); provided, however, that the Purchaser shall have
the right to extend the Expiration Date up to ten (10) additional business days
in order to satisfy any of the conditions set forth in Annex I hereto other than
the Offer Financing Condition, provided that the failure of such conditions to
be satisfied is not due to a breach of this Agreement by Parent or Purchaser.
Provided that this Agreement shall not have been terminated in accordance with
its terms and none of the events set forth in Paragraphs (a) through (f) of
Annex I hereto shall have occurred or be existing, no later than (2) two
business days after the public announcement of the terms of this Agreement, the
Purchaser shall file with the Securities and Exchange Commission (the "SEC") the
Purchaser's Tender Offer Statement on Schedule 14D-1 (together with any
supplements or amendments thereto, the "Offer Documents"), which shall contain
(as an exhibit) the Purchaser's offer to purchase the Common Shares (the "Offer
to Purchase") which shall be mailed to the holders of Common Shares with respect
to the Offer, which shall contain the conditions set forth in Annex I hereto and
no others; it being understood that the Offer shall be on the terms and subject
to the conditions that are agreed to by the parties hereto and no others and
that the Purchaser shall use its best efforts to file the Tender Offer Statement
on Schedule 14D-1 as soon as practicable, but in no event later than two
business days after such public announcement. The obligation of Purchaser to
accept for payment or pay for any Common Shares tendered pursuant to the Offer
will be subject only to the satisfaction of the condition set forth in Annex I
hereto. Without the prior written consent of the COMPANY, the Purchaser shall
not decrease the price per Common Share or change the form of consideration
payable in the Offer, decrease the number of Common Shares sought to be
purchased in the Offer, change the conditions set forth in Annex I, waive the
Minimum Condition (as defined in Annex I), impose additional conditions to the
Offer or amend any other term of the Offer in any manner adverse to the holders
of Common Shares; provided that the Purchaser expressly reserves the right to
waive any condition to the Offer (other than the Minimum Condition) without the
consent of the COMPANY. Subject to the terms of the Offer and this Agreement and
the satisfaction of all the conditions of the Offer set forth in Annex I hereto
as of any expiration date, Purchaser will accept for payment and pay for all
Common Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after such Expiration Date (the time of such purchase being
referred to herein as the "Offer Purchase Closing"). Purchaser shall make
reasonable provision for the payment of Offer proceeds to be made by wire
transfer of immediately available funds to any person tendering Common Shares
representing more than 1% of the COMPANY's outstanding Common Shares. Subject to
Section 8.01, if any of the conditions set forth in Annex I hereto are not
satisfied or, to the extent permitted by this Agreement, waived by the Purchaser
as of the Expiration Date (or any subsequently scheduled expiration date),
Purchaser will extend the Offer from time to time, in each case, for the
shortest time period that it reasonably believes is necessary for the
consummation of the Offer. Each of the parties hereto shall use its reasonable
best efforts to cause all conditions precedent set forth in
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Annex I to be fulfilled and avoid the occurrence of any event or to cure any
event which may prevent such conditions precedent set forth in Annex I from
being fulfilled.
(b) The Offer Document will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information supplied by the Company in writing
for inclusion in the Offer Documents. Each of Parent and the Purchaser, on the
one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
stockholders of the Company, in each case, as and to the extent required by
applicable federal securities laws.
SECTION 1.02 Company Actions.
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(a) The Company shall promptly (an in any event within two (2)
business days after the public announcement of the terms of this Agreement) file
with the SEC and mail it to the holders of Common Shares the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule 14D-
9"). The Schedule 14D-9 will set forth, and the Company hereby represents, that
the Board, at a meeting duly called and held, has (i) determined that the Offer
and the Merger are fair to and in the best interests of the Company and its
stockholders, (ii) approved the Offer and the Merger in accordance with Section
203 of the GCL, and (iii) resolved to recommend and continues to recommend
acceptance of the Offer and approval and adoption of the Merger and this
Agreement by the Company's stockholders (if such approval is required by
applicable law) (such recommendation to the Company's stockholders being
referred to as the "Board Recommendation"); provided, however, that such
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recommendation and approval may be withdrawn, modified or amended as provided in
Section 6.09. The Company further represents the Credit Suisse First Boston
Corporation ("CSFB") has delivered to the Board its written opinion to the
effect that, as of the date of this Agreement, the cash consideration to be
received for the Common Shares pursuant to the Offer and the Merger is fair to
the holders of the Common Shares (other than Parent and its affiliates) from a
financial point of view.
(b) Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agree promptly to correct any information provided
by either of them for use in the Schedule 14D-9 if and to the extent that it
shall have become false or misleading, and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to the holders of the Common Shares, in each
case, as and to the extent required by applicable federal securities law.
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(c) In connection with the Offer, the Company will use reasonable best
efforts to cause to be furnished to Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and shall
furnish Purchaser with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists of
securities positions) as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Purchaser and its affiliates and associates shall hold
in confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger, and
if this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession.
SECTION 1.03 Directors.
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(a) Subject to compliance with applicable law, promptly upon the
payment by the Purchaser for Common Shares pursuant to the Offer, and from time
to time thereafter, Parent shall be entitled to designate at least such number
of directors, rounded up to the next whole number, on the Board as is equal to
the product of the total number of directors on the Board (determined after
giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Common Shares beneficially owned by
Parent or its affiliates bears to the total number of Common Shares then
outstanding, and the Company shall, upon request of Parent, promptly take all
actions necessary to cause Parent's designees to be so elected, including, if
necessary, seeking the resignations of one or more existing directors.
(b) The Company's obligations to appoint Parent's designees to the
Board shall be subject to Section 14(1) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.03. Parent will
supply any information with respect to itself and its officers, directors and
affiliates required by such Section and Rule to the Company.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, the Company shall not extend the
time for the performance of any of the obligations or other acts of Parent or
the Purchaser or waive any of the Company's rights hereunder, or take any other
action if such amendment, termination, extension, waiver or action would have an
adverse effect on the minority stockholders of the Company.
SECTION 1.04 Stock Options. Promptly following the commencement of
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the Offers the Company shall offer to cancel any or all of the outstanding
options to purchase Common Shares and each outstanding stock appreciation unit
(each such option to purchase one share and each
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such unit representing one share being referred to as an "Option") granted under
the Company's Incentive Stock Option Plan and the Company's Stock Appreciation
Rights Plan (collectively the "Option Plan") for cash consideration as set forth
herein. Each holder of an Option which is vested (after giving consideration to
any acceleration of vesting provided in the Option Plan or the Company's Special
Bonus and Severance Plan (the "SBS Plan")) shall be offered the right to have
100% of his or her Options canceled by the Company in consideration of a payment
by the Company to such holder for each Option in an amount equal to the excess
of the Offer Price over the Applicable exercise price for such Option.
Cancellation of the Options and payment of the consideration therefor shall be
conditioned upon the purchase of Common Shares by the Purchaser pursuant to the
Offer. If such condition is met, the cancellation of Options and payment of the
consideration therefor in accordance with this section shall be made as promptly
as possible following the Offer Purchase Closing.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
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satisfaction or waiver of the conditions of this Agreement, and in accordance
with the applicable provisions of this Agreement and the GCL, at the Effective
Time (as defined in Section 2.02) the Purchaser shall be merged with and into
the Company. Following the Merger, the separate corporate existence of the
Purchaser shall cease and the Company shall continue as the surviving
corporation and shall succeed to and assume all the rights and obligations of
Purchaser in accordance with the GCL. In its capacity as the surviving
corporation of the Merger, the Company is sometimes referred to herein as the
"Surviving Corporation."
SECTION 2.02 Closing Effective Time. The closing of the Merger (the
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"Closing") will take place as promptly as practicable following the satisfaction
or waiver of the conditions set forth in Section 7.01 of this Agreement (the
"Closing"), at the offices of Brown, Todd & Heyburn PLLC, Lexington, KY.
Immediately following the Closing, the parties hereto shall cause the Merger to
become effective by filing a Certificate of Merger or, if permitted, a
Certificate of Ownership and Merger, with the Secretary of State of the State of
Delaware, in accordance with the relevant provisions of the GCL (the time of
such filing being the "Effective Time") and shall make all other filings or
recordings required under the GCL.
SECTION 2.03 Effects of the Merger.
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(a) The Merger shall have the effects set forth in the GCL.
(b) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
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(c) Subject to the provisions of Section 6.07 of this Agreement, the
By-Laws of the Purchaser in effect at the Effective Time shall be the By-Laws of
the Surviving Corporation until amended in accordance with the provisions
thereof and applicable law.
(d) Subject to applicable law, the directors of the Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death. resignation or removal.
(e) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall hold
office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.
SECTION 2.04 Additional Actions. If, at any time after the
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Effective Time, the Surviving Corporation shall consideration shall consider or
be advised that any further deeds, assignments or assurances in law or any other
acts are necessary or desirable to (a) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its rights, title or interest in, to or
under any of the rights, properties or assets of the Company or its
Subsidiaries, or (b) otherwise carry out the provisions of this Agreement, the
Company and its officers and directors shall be deemed to have granted the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such deeds, assignments or assurances in law and to take all acts necessary,
proper or desirable to vest, perfect or confirm title to and possession of such
rights, properties or assets in the Surviving Corporation and otherwise to
carry out the provisions of this Agreement, and the officers and directors of
the Surviving Corporation are authorized in the name of the Company or otherwise
to take any and all such action.
SECTION 2.05 Conversion of Common Shares. At the Effective Time, by
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virtue of the Merger and without any action on the part of the holders thereof,
(i) each Common Share issued and outstanding immediately prior to the Effective
Time (other than Dissenting Shares(as defined in Section 3.01) and Shares held
by the Company, Parent, Purchaser and their respective Subsidiaries) shall be
converted into the right to receive the Merger consideration in cash, payable to
the holder thereof, without interest thereon, upon surrender of the certificate
formerly representing such Common Share, and (ii) each Common Share owned by the
Company or one of its Subsidiaries or by Parent or Purchaser or one of its
Subsidiaries shall be canceled without payment and without surrender of the
certificate formerly representing such Common Shares.
SECTION 2.06 Conversion of Purchaser Common Stock. At the Effective
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Time, each share of common stock, par value $.01 per share, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and become one validly issued, fully paid and non-assessable
share of common stock, par value $.01 per share, of the Surviving Corporation.
SECTION 2.07 Company Option Plans. At the Effective Time, by virtue
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of the Merger and without any action on the parts of the holders thereof, each
then outstanding Option shall
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be converted into the right to receive an amount determined by multiplying (i)
the excess, if any, of the Offer Price over the applicable exercise price of
such Option by (ii) the number of Common Shares such holder could have purchased
is such holder had exercised such Option immediately prior to Effective Time,
but only to the extent then vested and exercisable, provided that the
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determination of the exercisablility of Options shall take into account the
acceleration of vesting provided for in the Option Plan or the SBS Plan. The
Surviving Corporation will pay any amount required to be paid pursuant to this
Section 2.07 upon exercise or delivery of any then outstanding Options to the
Surviving Corporation by or on behalf of the holder thereof.
SECTION 2.08 Merger Without Meeting of Stockholders. The Purchaser
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and Parent agree to take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the acceptance for
payment of and payment for Common Shares by the Purchaser pursuant to the Offer
without a meeting of stockholders of the Company, in accordance with Section 253
of the GCL.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
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Agreement to the contrary, Common Shares outstanding immediately prior to the
Effective Time and held by a holder who has demanded appraisal for such Shares
in accordance with Section 262 of the GCL, if such Section 262 provides for
appraisal rights for such shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Merger Consideration as provided in
Section 2.05, unless and until such holder fails to perfect or withdraws or
otherwise loses his right to appraisal, such Dissenting Shares shall thereupon
be treated as if they had been converted as of the Effective Time into the right
to receive the Merger Consideration, if any, to which such holder is entitled,
without interest or dividends thereon. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of Common Shares and
Parent shall have the right to participate in all negotiations and proceedings
with respect to such demands. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
SECTION 3.02 Payment for Common Shares.
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(a) From and after the Effective Time, the Bank of New York, or such
other bank or trust company as shall be mutually acceptable to Parent and the
Company, shall act as paying agent (the "Paying Agent") in effecting the payment
of the Merger Consideration in respect of certificates (the "Certificates")
that, prior to the Effective Time, represented Common Shares entitled to payment
of the Merger Consideration pursuant to Section 2.05. At the Effective Time,
Parent or the Purchaser shall deposit, or cause to be deposited, in trust with
the Paying Agent the aggregate Merger Consideration to which holders of Common
Shares shall be entitled at the Effective Time pursuant to Section 2.05.
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(b) Promptly after the Effective Time, the Paying Agent shall mail to
each record holder of Certificates that immediately prior to the Effective Time
represented Common Shares (other than Certificates representing Dissenting
Shares and Certificates representing Common Shares held by Partner, the
purchaser, or the Company) a form of letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and instructions for use in surrendering such certificates and receiving the
Merger Consideration in respect thereof. Upon the surrender of each such
Certificate, the Paying Agent shall, in consideration for the shares represented
by such Certificates, pay he holder of such Certificate the Merger consideration
multiplied by the number of Common Shares formerly represented by such
Certificate, in consideration therefor, and such Certificate shall forthwith be
canceled. Until so surrendered, each such Certificate (other than Certificates
representing Dissenting Shares and Certificates representing Common Shares held
by Parent, the Purchaser, or the Company) shall represent solely the right to
receive the aggregate Merger Consideration relating thereto. No interest or
dividends shall be paid or accrued on the Merger Consideration. If the Merger
Consideration (or any portion thereof) is to be delivered to any person other
than the person in whose name the Certificate formerly representing Common
Shares surrendered therefor is registered, it shall be a condition to such right
to receive such Merger Consideration that the Certificate so surrendered shall
be properly endorsed or otherwise be in proper from for transfer and that the
person surrendering such Common Shares shall pay to the Paying Agent any
transfer or other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of he Paying Agent that such
tax has been paid or is not applicable. Promptly after he Effective Time, the
Paying Agent shall mail to each record holder of Certificates that immediately
prior to the Effective Time represented Dissenting Shares a notice of appraisal
rights.
(c) Promptly following the date which is 180 days after the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, holders of Common Shares who have not theretofore complied with this
Section 3.02 shall look only to the Surviving Corporation for payment of the
Merger Consideration in respect thereof (subject to applicable abandoned
property, escheat and similar laws), in each case, without interest or dividends
thereon.
(d) None of Parent, the Purchaser, the Surviving Corporation or the
Paying Agent shall be liable to any person in respect of any Common Shares (or
dividends or distributions with respect thereto) or cash deposited by Parent or
the Purchaser with the Paying Agent that is delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to seven years after the
Effective Time (or immediately prior to such earlier date on which any cash
would otherwise escheat to or become the property of any Governmental Entity),
any such cash in respect of such Certificate shall, to the extent permitted by
applicable law become the property of Parent, free and clear of all claims or
interest of any person previously entitled thereto.
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(e) Parent, the Purchaser and the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable or issuable
pursuant to this Agreement to any holder of Common Shares such amounts as
Parent, the Purchaser or the Paying Agent are required to deduct and withhold
with respect to such payment or issuance under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holders of Common Shares in respect of which such
deduction and withholding was made.
(f) All cash issued upon surrender of Certificates in accordance with
the terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Common Shares formerly represented thereby. After the
Effective Time, there shall be no transfers on the stock transfer books of the
Surviving Corporation of any Common Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
formerly representing Common Shares are presented to the Surviving Corporation
or the Paying Agent, they shall be surrendered and canceled in return for the
payment of the aggregate Merger Consideration relating thereto, as provided in
this Article III, subject to applicable law in the case of Dissenting Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser that
except as set forth in the Disclosure Schedules (as hereinafter defined) as of
the date hereof (or such other later date as is specified):
SECTION 4.01 Organization and Qualification: Subsidiaries. (a) The
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Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Set forth on the Subsidiary Schedule
is a list of every corporation, limited liability company, partnership or other
business organization or entity of which the Company owns, either directly or
through its Subsidiaries, (a) more than 50% of (i) the total combined voting
power of all classes of voting securities of such entity, (ii) the total
combined equity interests therein, or (iii) the capital or profit interests
therein, in the case of a partnership; or (b) otherwise has the power to vote or
direct the voting of sufficient securities to elect a majority of the board of
directors or similar governing body of such entity (the "Subsidiaries"). Each
of the Subsidiaries listed on the Subsidiary Schedule is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company and each of the Subsidiaries has
the requisite corporate power to own, operate or lease its properties and to
carry on its business as it is now being conducted, and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction in which
the nature of its business or the properties owned, operated or leased by it
makes such qualification, licensing or good standing necessary, except where the
failure to have such power, or the failure to be so qualified, licensed or in
good standing, would not have a Material Adverse Effect on the Company. The
term "Material Adverse Effect on the Company," as used in this
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Agreement, means any development, condition or circumstance having an effect on
the assets, business, operations, or financial condition of the Company or any
of its Subsidiaries that is materially adverse to the Company and its
Subsidiaries taken as a whole other than any development, condition or
circumstance resulting from general economic conditions or relating generally to
the coal or electric power industries.
SECTION 4.02 Charter and By-Laws. The Company has heretofore made
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available to Parent and the Purchaser a complete and correct copy of the charter
and the by-laws or comparable organizational documents, each as amended to the
date hereof, of the Company and each of the Subsidiaries.
SECTION 4.03 Capitalization. The authorized capital stock of the
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Company consists of 50,000,000 Common Shares and 1,000,000 shares of Preferred
Stock, no par value. As of the close of business on July 28, 1998, 28,222,671
Common Shares were issued and outstanding, and 244,000 Common Shares were in the
Company's treasury, and no shares of Preferred Stock were issued and
outstanding. The Company has no shares reserved for issuance, except that, as
of July 28, 1998, there were 1,666,760 Common Shares reserved for issuance
pursuant to outstanding Options under the Option Plan, all of which were granted
prior to March 31, 1998. The Options Schedule sets forth the name of each
holder of an outstanding Option under the Option Plan, and with respect to each
Option held by any such holder, the grant date, exercise price and number of
Common Shares for which such Option is exercisable. As of the date hereof, the
Company has no options to purchase Common Shares outstanding other than those
granted and outstanding under the Option Plan. Since December 31, 1997, the
Company has not issued any shares of capital stock except pursuant to the
exercise of Options outstanding as of such date. All of the outstanding Common
Shares are, and all Common Shares which may be issued pursuant to the exercise
of outstanding Options will be, when issued in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and nonassessable.
There are no bonds, debentures, notes or other indebtedness having general
voting rights (or convertible into securities having such rights) of the Company
or any of its Subsidiaries issued and outstanding. Except as set forth on the
Options Schedule and except as contemplated by this Agreement, or between the
Company and one or more of its direct or indirect wholly-owned subsidiaries,
there are no existing options, warrants, calls, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company or any of the Subsidiaries, obligating
the Company or any of the Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock of, or other equity
interest in or voting security of, the Company or any of the Subsidiaries or
securities convertible into or exchangeable for such shares or equity interests
or voting securities and neither the Company nor any of the Subsidiaries is
obligated to grant or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment. Except as contemplated by
this Agreement or between the Company and one or more of its direct or indirect
wholly-owned subsidiaries, there are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Common Shares or the capital stock of the Company or any of the
Subsidiaries. Each of the outstanding shares of capital stock of each of the
Company's
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Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and such shares of the Company's Subsidiaries as are owned by the Company or by
a subsidiary of the Company are owned in each case free and clear of any Lien
(as hereinafter defined). Other than as set forth on the Contracts Schedule, the
Company has not agreed to register any securities under the Securities Act or
under any state securities law or granted registration rights to any person or
entity.
SECTION 4.04 Authority Relative to this Agreement. The Company has
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all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board and no other corporate proceedings on the
part of the Company or on the part of the stockholders of the Company are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby except as required by Delaware law. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due and valid authorization, execution and delivery of this
Agreement by Parent and the Purchaser, this Agreement constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
SECTION 4.05 No Conflict; Required Filings and Consents.
------------------------------------------
(a) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the Merger, compliance by the
Company with any of the provisions hereof or consummation of the Merger or any
other transaction contemplated hereby will (i) conflict with or violate the
Certificate of Incorporation or By-Laws of the Company or the comparable
organizational documents of any Subsidiary, (ii) conflict with or violate any
statute, ordinance, rule, regulation, Order, judgment or decree applicable to
the Company or its subsidiaries, or by which any of them or any of their
respective properties or assets may be bound, or (iii) result in a violation or
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in any loss
of any material benefit, or the creation of any Lien on any of the property or
assets of the Company or any of its Subsidiaries (any of the foregoing referred
to in clause (ii) or this clause (iii) being a "Violation") pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective properties may be bound or affected, except, in the
cases of clauses (ii) and (iii) for any such Violations which would not
individually or in the aggregate have a Material Adverse Effect on the Company.
(b) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the Merger or any other transaction
contemplated hereby or compliance by the Company and its Subsidiaries with any
of the provisions hereof will require any consent, waiver, approval,
authorization or permit of, or registration or filing with or notification to
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(any of the foregoing being a "Consent") any government or subdivision thereof,
domestic, foreign or supranational or any administrative, governmental or
regulatory authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity") or any third party, except for (I)
compliance with any applicable requirements of the Securities Exchange Act of
1934, as amended (the Exchange Act"), (ii) the filing of a certificate of
merger, or, if permitted, a certificate of ownership and merger, pursuant to the
GCL, (iii) compliance with the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") and any requirements of any foreign or
supranational Antitrust Laws (as hereinafter defined), (iv) other Consents
identified in the Consents Schedule (including notices and Consents relating to
or in connection with mining, reclamation and environmental Permits), and (v)
other Consents the failure of which to obtain or make would not individually or
in the aggregate have a Material Adverse Effect on the Company.
SECTION 4.06 SEC Reports and Financial Statements.
------------------------------------
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed by
the Company with the SEC since January 1, 1995 (the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Exchange Act or the Securities Act of 1933 and the rules and
regulations of the SEC promulgated thereunder applicable, as the case may be, to
such SEC Reports, and none of the SEC Reports contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated balance sheets as of December 31, 1997, 1996,
1995 and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1997
(including the related notes and schedules thereto) of the Company contained in
the Form 10-Ks for the years ended December 31, 1997 1996 and 1995 included in
the SEC Reports and the consolidated balance sheet as of March 31, 1998 and the
related consolidated statements of income, stockholders' equity and cash flows
for the quarter ended March 31, 1998 contained in the Form 10-Q for the quarter
ended March 31, 1998 and the related consolidated statements of income,
stockholders' equity and cash flows for the six months ended June 30, 1998
contained in the Form 10-Q for the quarter ended June 30, 1998 present, fairly,
in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated Subsidiaries as of the dates or for the periods presented therein
in conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved except as
otherwise noted therein, including the related notes. The audited balance sheet
as of December 31, 1997 is herein referred to as the "December Balance Sheet,"
the unaudited balance sheet as of March 31, 1998 is herein referred to as the
"March Balance Sheet," and the unaudited balance sheet as of June 30, 1998 is
herein referred to as the "June Balance Sheet." The amounts accrued or reserved
for in the December Balance Sheet, the March Balance Sheet and the June Balance
Sheet with respect to future costs associated with workers' compensation
liabilities, Reclamation Obligations (as hereinafter defined) and Black Lung
liabilities (as hereinafter defined) have been accrued or reserved for in
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accordance with GAAP, consistently applied. The amounts reflected in the
December Balance Sheet, the March Balance Sheet and the June Balance Sheet with
respect to coal and mineral reserves have been included or will be included in
such financial statements in accordance with GAAP, consistently applied. The
Company has accrued its and its Subsidiaries' and affiliates' obligations for
retiree medical benefits in accordance with Statement of Financial Account
Standards No. 106.
(c) Since March 31, 1998, except as disclosed in the SEC Reports or
the Developments Schedule, there has not been any Material Adverse Effect on the
---------------------
Company or any event, condition or development which the Company believes is
reasonably likely to result in a Material Adverse Effect on the Company.
(d) The Company and its Subsidiaries are not subject to any material
liabilities or obligations (absolute, accrued, contingent or otherwise) other
than (i) arising under contracts or circumstances reflected on or otherwise
referred to in the Disclosure Schedules (subject to Section 4.12(c)), (ii)
reflected in, reserved against or otherwise disclosed in the December Balance
Sheet, March Balance Sheet or June Balance Sheet, or (iii) incurred in the
ordinary course of business consistent with past practice.
SECTION 4.07 Information. None of the information supplied by
-----------
the Company in writing specifically for inclusion or incorporation by reference
in (i) the Offer Documents, (ii) the Schedule 14D-9, or, (iii) any other
document to be filed with the SEC or any other Governmental Entity in connection
with the transactions contemplated by this Agreement (the "Other Filings") will,
at the respective times filed with the SEC or other Government Entity, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Schedule 14D-9 will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 4.08 Absence of Certain Developments. Except as set
-------------------------------
forth on the Developments Schedule and except as expressly contemplated by this
Agreement, since March 31, 1998, neither the Company nor any of its Subsidiaries
has engaged in any material transaction outside the ordinary course of business
consistent with past practice or:
(a) Incurred any indebtedness for borrowed money, except borrowings
from banks (or other financial institutions) necessary to meet ordinary course
working capital requirements and to finance capital expenditures in the ordinary
course of business consistent with past practice;
(b) Mortgaged, pledged or subjected to any Lien, any asset or related
group of assets having a net book value in excess of $500,000;
(c) Sold, leased, assigned or transferred any tangible asset or
related group of assets having a net book value in excess of $500,000 except for
the sale of inventory and obsolete or used machinery and equipment in the
ordinary course of business consistent with past practice;
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(d) Sold, leased, assigned or transferred any interest in real estate
having a net book value in excess of $500,000;
(e) Sold, licensed, assigned or transferred any patents, trademarks,
trade names, copyrights, trade secrets or other intangible assets having a fair
market value in excess of $500,000 individually or in the aggregate;
(f) Waived or relinquished any right or claim or related group of
rights or claims except any such item which the Company believes has a fair
value of less than $500,000 individually or in the aggregate;
(g) (x) Issued or sold any of its Common Shares or other equity
securities or any warrants, options or other rights to acquire its Common Shares
or other securities of the Company, except for the issuance of Common Shares
upon exercise of Options outstanding as of March 31, 1998 or (y) purchased or
redeemed or agreed to purchase or redeem any Common Shares or other equity
securities;
(h) Made or entered into binding commitment for any capital
expenditures or related group of capital expenditures in excess of $1,000,000
other than such expenditures contemplated in the financial statements and plans
provided to the Purchaser by the Company;
(i) Modified or amended in any material manner or terminated or
entered into any Material Contract (as hereinafter defined);
(j) Granted any increase in the base compensation of, or made any
other material change in the employments terms for, any of its directors,
officers, and employees other than normal periodic increases or changes
reflecting or based upon changed responsibilities or duties made in the ordinary
course of business consistent with past practice or changes made pursuant to any
collective bargaining agreements or existing contracts;
(k) Adopted, modified, or terminated any bonus, profit-sharing,
incentive, severance or other plan or contract for the benefit of any of its
directors, officers, and employees, other than for changes which are required by
law or a collective bargaining agreement; or
(l) Declared or paid any dividend or other distribution with respect
to the Common Shares except regular quarterly dividends not in excess of $0.075
per share.
SECTION 4.09 Real Property.
-------------
(a) The Owned Real Property Schedule includes all material real
property interests owned in fee by the Company or its Subsidiaries and
identifies those interests which constitute Active Operating Properties and
Reserves and/or Operating Facilities.
-14-
(b) The Company and its Subsidiaries shall promptly provide the
following information with regard to each material parcel or tract of owned real
property (exclusive of oil and gas properties): (i) an identification of the
deed or other instrument of conveyance; (ii) recording information (if
available, and if not, the state and county where the relevant parcel or tract
is located; (iii) the names of at least one grantor and one grantee thereunder;
and (iv) the approximate size of the relevant parcel or tract when acquired.
The company and its Subsidiaries shall also promptly provide an accurate listing
of all owned real property within the currently existing five (5) year mining
plan of the Company and its Subsidiaries.
(c) The Leased Real Property Schedule includes all material real
property interests in which the Company has or its Subsidiaries have a leasehold
interest and identifies those leasehold interests which constitute Active
Operating Properties and Reserves and/or Operating Facilities.
(d) The Company and its Subsidiaries shall promptly provide the
following information with regard to each material parcel or tract of leased
real property (exclusive of oil and gas properties): (i) an identification of
the lease or sublease agreement and any and all amendments, modifications and
side letters; (ii) recording information (if available), and if not, the state
and county where the relevant parcel or tract is located; (iii) the names of at
least one lessor and one lessee (or sublessor or sublessee) thereunder; (iv) the
approximate size of the relevant parcel or tract leased thereunder when
acquired; and (v) the term thereof, including any extension options. The
Company and its Subsidiaries shall also promptly provide an accurate listing of
all leased real property within the currently existing five (5) year mining plan
of the Company and its Subsidiaries.
(e) Except as set forth on the Real Property Disclosure Schedule and
except Permitted Encumbrances which individually or in the aggregate do not
constitute a Material Adverse Effect on the Company, the Company and its
Subsidiaries hold (i) good and marketable Mining Title, as hereinafter defined,
to the Active Operating Properties and Reserves and to the Operating Facilities
and (ii) as to the Other Real Property an interest of record or a leasehold
interest from a person or entity which the Company or its Subsidiaries
reasonably believe has an interest of record. As used in this subparagraph (e),
Mining Title means fee simple title to surface and/or coal or an undivided
interest in fee simple title thereto or a leasehold interest in all or an
undivided interest in surface and/or coal together with (i) for Active Operating
Properties and Reserves designated for surface mining no less than those
easements, licenses, privileges, rights, and appurtenances as are necessary to
mine, remove, and transport coal by surface mining methods; (ii) for Active
Operating Properties and Reserves designated for underground mining, no less
than those easements, licenses, privileges, rights, and appurtenances as are
necessary to mine, remove, and transport coal by underground mining methods; and
(iii) for Operating Facilities, no less than those easements, licenses,
privilege, rights, and appurtenances as are necessary to operate the Operating
Facilities in the manner presently operated.
(f) Except as disclosed in the Real Property Disclosure Schedule,
neither the Company nor its Subsidiaries have received any written notice
alleging that the Company or its Subsidiaries are in default under any material
lease. Except as disclosed on the Real Property
-15-
Disclosure Schedule and except as could not reasonably be expected to have a
Material Adverse Effect on the Company, neither the Company nor its Subsidiaries
are in default under any lease relating to Active Operating Properties and
Reserves, Operating Facilities or Other Real Property.
(g) Except for leases which would not have a Material Adverse Effect
on the Company if found to be invalid or unenforceable, each of the leases on
the Leased Real Property Schedule is, and will be on and immediately following
the Closing Date, valid and enforceable against the lessor or other parties
thereto in accordance with its terms. To the Knowledge of the Company there are
no unwritten modifications to such leases.
(h) To the Knowledge of the Company, except as set forth on the Real
Property Disclosure Schedule, neither the Company nor any of its Subsidiaries
have received any notice of claims that the Company or any Subsidiary has mined
any coal that did not belong to it, or mined any coal in such reckless or
imprudent fashion as to give rise to any material claims for loss, waste or
trespass.
(i) All existing maps, surveys, title insurance policies, title
insurance, abstracts and other evidence of title have been made available by the
Company and its Subsidiaries to the Purchaser.
(j) To the Knowledge of the Company, and other than set forth on the
Real Property Disclosure Schedule, no condemnation or eminent domain proceeding
against any part of such property is pending or threatened, and the Company and
its Subsidiaries have no knowledge that any such proceeding is contemplated.
(k) To the Knowledge of the Company, except as set forth on the Real
Property Disclosure Schedule, there are no adverse possession claims regarding
those real property interests which constitute Active Operating Properties and
Reserves and/or Operating Facilities.
(l) "Permitted Encumbrances" as used in this Agreement means: (i)
rights of co-tenants, if any; (ii) rights and easements of owners of undivided
interests in the property where the Company or its Subsidiaries own less than
100% of the fee interest; (iii) rights and easements of owners of interests in
the surface where the Company or its Subsidiaries do not own or lease the
surface; (iv) rights and easements of owners and lessees, if any, of coal or
other minerals, including oil and gas, where the Company or its Subsidiaries do
not own coal or other minerals; (v) rights and easements of owners and lessees
of other coal seams and other minerals, including oil and gas, not owned or
leased by the Company or its Subsidiaries; (vi) all existing easements or rights
of way, whether of record or apparent on the premises, including, but not
limited to, roads, highways, pipelines, underground gas storage rights, railroad
and utility easements or rights-of-way, none of which could reasonably be
expected to have a Material Adverse Effect on the Company; (vii) real estate
taxes not yet due and payable; (viii) statutory liens for mechanics, materialmen
or laborers for work and labor delivered to or performed on the premises
securing obligations of the Company or its Subsidiaries or their contractors
incurred in the Ordinary Course of Business and in the aggregate
-16-
do not exceed $1,000,000; (ix) specific encumbrances and exceptions noted in a
Disclosure Schedule; (x) conditions, encumbrances, and covenants of record and
other title exceptions, defects and encumbrances which could not reasonably be
expected to have a Material Adverse Effect on the Company; (xi) terms,
agreements, provisions, conditions, and limitations contained in leases and
rights of lessors, their heirs, executors, administrators, successors, and
assigns (applies to leasehold estates); (xii) farm, grazing, hunting,
recreational and residential leases in which the Company or any Subsidiary is
the lessor; (xiii) royalty obligations to sellers or transferors of fee coal or
lease properties; (xiv) rights of others to subjacent or lateral support and
absence of subsidence rights; and (xv) rights of repurchase when mining and
reclamation re completed.
SECTION 4.10 Personal Property. Except as would not have a Material
-----------------
Adverse Effect on the Company:
(a) The Company and its Subsidiaries have good and marketable title
to, or a valid leasehold interest in, the personal property owned or used by
them, including the Leased Personal Property that is listed on the Personal
Property Lease Schedule (but excluding, to he extent applicable, any leased real
property), in each case, free and clear of all Liens.
(b) The machinery and equipment owned or used by the Company and its
Subsidiaries have been maintained in accordance with industry practice, are in
generally good operating condition and adequate for carrying out the purposes
for which such personal property is employed, except for normal obsolescence and
wear and tear incurred in the ordinary course of business.
SECTION 4.11 Tax Matters. The Company and its Subsidiaries have
-----------
filed all income Tax Returns and other Tax Returns required to be filed by them,
excluding those Tax Returns the failure of which to file would not have Material
Adverse Effect on the Company. All Tax Returns for the Company in respect of
all years not barred by the statute of limitations have heretofore been made
available by the Company to Purchaser and such returns are true, correct, and
complete in all material respects. Except as set forth on the Taxes Schedule or
the Litigation Schedule: (A) all Taxes shown thereon as owing by the Company
and the Subsidiaries on all such Tax Returns have been fully paid; (b) to the
Company's Knowledge, (i) the provision for taxes on the March Balance Sheet and
the June Balance Sheet are sufficient for all accrued and unpaid Taxes as of he
date thereof and (ii) all material Taxes which the Company or any of its
Subsidiaries is obligated to withhold from amounts owing to any employee,
creditor or third party have been fully paid or properly accrued; (c) there are
no material claims pending, or to the Company's Knowledge, threatened, for Taxes
against the Company or any Subsidiary with respect to any period ending as of or
prior to the date hereof; (d) neither he Company nor any Subsidiary has waived,
or agreed to the extension of, the statute of limitations with respect to any
Tax Return; (e) neither the Company nor any Subsidiary has any liability for
Taxes for any Person (other than the Company and its Subsidiaries) under
Treasury Regulation 1.1502-6 (or any similar provision of state, local or
foreign income Tax law) as a transferee or successor by contract or otherwise;
and (f) the Company and its Subsidiaries have maintained their respective
records with respect to Taxes in a commercially reasonable manner.
-17-
SECTION 4.12 Contracts and Commitments.
-------------------------
(a) Except as set forth on the Contract Schedule, the Lease Schedules,
the Employee Benefits Schedule or the Development Schedule, neither the Company
nor any of its Subsidiaries is a party to any: (i) collective bargaining
agreement with any labor union; (ii) bonus, pension, profit sharing, retirement
or other form of deferred compensation plan which may provide compensation or
benefits of at least Two Hundred Thousand Dollars ($200,000.00) or which when
aggregated with all such other plans not included on the schedules may provide
compensation or benefits of at Least One Million Dollars ($1,000,000.00); (iii)
stock purchase, stock option, stock appreciation or similar plans; (iv) contract
for the employment of any officer, individual employee or other person on a
full-time or consulting basis involving an annual compensation commitment by the
Company or a Subsidiary in excess of $200,000; (v) agreement or indenture
relating to the borrowing of money in excess of $1,000,000 or to mortgaging,
pledging or otherwise placing a lien (other than a Permitted Lien) on any
portion of the Company's assets, other than assets that, individually or in the
aggregate, would not be material to the operations of the Company and, its
Subsidiaries in the ordinary course of business consistent with past practice;
(vi) guaranty of any obligation for borrowed money in excess of $1,000,000;
(vii) lease or agreement under which it is lessee of, or holds or operates any
personal property owned by any other party, for which the annual rental exceeds
$250,000, (viii) contract or group of related contracts with the same party for
the supply of coal to any Person in an amount of more than $3,000,000 or
providing for deliveries extending beyond December 31, 1998; (ix) contract or
group of related contracts with the same party for the purchase of inventories,
supplies or services, under which the undelivered balance of such inventories,
supplies or services has a selling price in excess of $1,000,000 (other than
contracts to purchase coal in the ordinary course of business in an amount less
than $3,000,00); (x) contract or group of related contracts with the same party
for the sale of products or services (other than coal sales or supply contracts
under which the undelivered balance of such products or services has a sales
price in excess of $1,000,000; (xi) tariff agreements and other transportation
contracts for the shipment of coal which provides for transportation costs of,
or reasonably projected to be, more than $250,000 per year; (xii) contract which
prohibits or materially limits the Company or a Subsidiary in any material
respect from freely engaging in business in the United States or anywhere else
in the world; or (xiii) any other contract or commitment (A) involving the
payment by or to the Company or any of its Subsidiaries of $1,000,000 or more
(whether in cash or other assets) in any 12 month period or $5,000,000 or more
(whether in cash or other assets) in the aggregate over the life of the contract
or (B) the termination of which or loss of the benefits thereunder would have a
Material Adverse Effect on the Company. "Material Contract" means any contract,
agreement or other arrangement of a type referred to in any of clauses (i)
through (xiii) of this Section 4.12(a).
(b) Purchaser either has been supplied with, or has been given access
to, a true and correct copy of all written contracts which are referred to on
the Contracts Schedule and the Lease Schedules, together with all material
amendments, arbitration decisions and grievance settlements related to
collective bargaining agreements and contracts with any labor union, waivers or
other changes thereto.
-18-
(c) Each contract listed on the Contracts Schedule or the Lease
Schedule is legal, valid, binding, enforceable and in full force and effect, and
will continue to be legal, valid, binding, enforceable and in full force and
effect following consummation of the transactions contemplated hereby, except as
would not individually or in the aggregate, have a Material Adverse Effect on
the Company. To the Company's Knowledge, neither the Company nor its
Subsidiaries are in default, breach or violation (or would be in default, breach
or violation with notice or lapse of time, or both) under any contract listed on
the Contracts Schedule or the Lease Schedules, except for such defaults which
individually or in the aggregate, would not have a Material Adverse Effect on
the Company and except that Leased Real Property shall be excluded from this
representation.
SECTION 4.13 Intellectual Property. Set forth on the attached
---------------------
Intellectual Property Schedule are all of the material patents, trademarks,
copyrights and service marks (and any registrations or applications therefor)
and all material trade names and corporate names used in the conduct of the
business of the Company and its Subsidiaries as now conducted (collectively, the
"Intellectual Property"). Except as set forth on the Intellectual Property
Schedule, the Company and its Subsidiaries own or have sufficient rights to use
the Intellectual Property to conduct their current operations. Except as set
forth on the Intellectual Property Schedule, neither the Company nor any
Subsidiary has received any written notices of material infringement or
misappropriation from any third party with respect to the Intellectual Property,
and to the Company's Knowledge, neither the Company nor any Subsidiary has
infringed nor is it currently infringing the intellectual property of any other
Person, except where such infringement would not individually or in the
aggregate, have a Material Adverse Effect.
SECTION 4.14 Licenses and Permits. Except as would not have a
--------------------
Material Adverse Effect on the Company, the Company and its Subsidiaries possess
all necessary mining permits, leases, mining rights, mining licenses, re-mining
agreements and similar authorizations and approvals (collectively, the "Mining
Permits"), including those listed on the Mining Permits Schedule, and other
licenses, permits, certifications and other governmental or regulatory
"Permits"), necessary to enable the Company and its Subsidiaries to carry on
their mining business as presently conducted, and all such permits are valid,
and in full force and effect and there exists no default thereunder. Except as
set forth on the Mining Permits Schedule, to the Company's Knowledge, the
Company and its Subsidiaries have obtained all material Mining Permits necessary
for the Company and its Subsidiaries to conduct the mining operations proposed
to be conducted under the Company's current five-year mining plan (the "Mining
Plan") within the twelve month period commencing on the date of this Agreement.
Except as set forth on the Mining Permits Schedule, to the Company's Knowledge,
the Company and its Subsidiaries have initiated the process to obtain all
material Mining Permits necessary for the Company and its Subsidiaries to
conduct the mining operations proposed to be conducted under the Mining Plan
within the twelve month period following the twelve month period commencing on
the date of this Agreement. Except as set forth on the Mining Permits Schedule,
to the Company's Knowledge, with respect to any material Mining Permits which
can reasonably be expected to take more than two years to obtain, the Company
and its Subsidiaries have its Subsidiaries have initiated the process so that
such Mining Permits may reasonably be expected to be issued not less than six
months prior to the applicable commencement date for the mining
-19-
operations covered by such Mining Permits. Except as disclosed on the Mining
Permits Schedule, based upon a good faith determination of Senior Managers of
the Company's Subsidiaries, Engineering and/or Permitting Departments, the time
remaining prior to the commencement of all mining operations under the Mining
Plan is sufficient to obtain any Mining Permits not yet obtained by the Company
and its Subsidiaries which are necessary to conduct the mining operations
contemplated in the Mining Plan not less than six months prior to the proposed
commencement of such mining operations under the Mining Plan. Except as set
forth on the Permits Schedule or the Litigation Schedule, to the Company's
Knowledge, there is no pending or threatened litigation or other proceeding
under which any material Mining Permit or other Permit could reasonably be
expected to be revoked, terminated or suspended.
SECTION 4.15 Litigation. Except as set forth on the attached
----------
Litigation Schedule, there are no actions, suits or proceedings pending or, to
the Company's Knowledge, threatened against the Company or any of its
Subsidiaries (or, in each case, in which the Company or its Subsidiaries is a
party), at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, except those which are not individually or
in the aggregate, reasonably likely to have a Material Adverse Effect on the
Company. Except as set forth on the attached Litigation Schedule, neither the
Company nor any of its Subsidiaries is subject to any outstanding judgment,
injunction, order or decree of any court or Government Entity to which this
Company or its Subsidiaries is a party which adversely affects the operations of
the Company or such Subsidiary.
SECTION 4.16 Governmental Consents, etc.. Except as set forth in
---------------------------
Section 4.05, on the Governmental Consents Schedule or in connection with the
Purchaser's financing of the transactions contemplated in this Agreement, no
consent, waiver, approval or authorization, order, permit or qualification of,
or declaration to or filing with, any governmental or regulatory authority is
required in connection with the execution, delivery or performance of this
Agreement by the Company or the consummation by the Company of any other
transaction contemplated hereby, the failure of which individually or in the
aggregate have a Material Adverse Effect on the Company.
SECTION 4.17 Employee Benefit Plans.
----------------------
Except as listed on the Employee Benefits Schedule or the Contracts
Schedule attached hereto, with respect to employees of the Company and its
Subsidiaries , (i) neither the Company nor any of its Subsidiaries maintains or
contributes to any qualified defined contribution retirement plan, or qualified
defined benefit Pension plan (either being referred to as a "Pension Plan") and
(ii) the Company does riot maintain or contribute to any welfare benefit plans
(as that term is defined in Section 3(l) of ERISA) (the "Welfare Plans"). The
Pension Plans and the Welfare Plans are collectively referred to as the "Plans."
Each of the Pension Plans (other than the Multiemployer Plans) has received a
favorable determination letter from the Internal Revenue Service that such Plan
is a "qualified plan" under Section 401 (a) of the Internal Revenue Code of
1986, as amended (the "Code"), the related trusts are exempt from Tax under
Section 501 (a) of the Code, and the Company is not aware of any facts or
circumstances that would jeopardize the qualification of such Pension
-20-
Plan. The Plans (other than any Multiemployer Plans) comply in form and in
operation in all material respects with the requirements of the Code and the
Employee Retirement Income Security Act of 1974, as amended ("MSA") and any
other laws, rules and regulations applicable thereto.
(b) With respect to the Plans (other than the Multiemployer Plans),
(i) all required contributions have been made or properly accrued, (ii) them are
no actions, suits or claims pending, other than routine claims for benefits, and
(iii) them have been no "prohibited transactions" (as that term is defined in
Section 406 of ERISA or Section 4975 of the Code).
(c) The Company has furnished to Purchaser true and complete copies of
(i) the Plans and summary plan descriptions, (H) the most recent determination
letter received from the Internal Revenue Service regarding the Plans (other
than the Multiemployer Plans) and (iii) the latest financial statements for the
Plans (other than the Multiemployer Plans) and latest available actuarial
reports.
(d) Neither the Company nor any Subsidiary, nor, to the Company's
Knowledge, any of its directors, officers, employees or any other "fiduciary,"
as such term is defined in Section 3 of ERISA, has committed any material breach
of fiduciary responsibility imposed by ERISA or any other applicable law with
respect to the Plans which would subject Parent or Purchaser or any of their
respective directors, officers or employees to any material liability under
ERISA or any applicable law.
(e) The Company has not incurred any material liability for any tax or
civil penalty imposed by Section 4975 of the Code or Section 502 of ERISA.
(f) Except as listed on the Employee Benefits Schedule attached
hereto, (i) no Plan is a Multiemployer Plan (as defined in Section 4001(a)(3) of
ERISA) ("Multiemployer Plan") or a plan that has two or more contributing
sponsors at least two of whom are not under common control, within the meaning
of Section 4063 of ERISA (a "Multiple Employer Plan"), and (ii) none of the
Company and its Subsidiaries nor any ERISA Affiliates has incurred any
withdrawal liability that has not been satisfied in full, nor been advised by a
Multiemployer Plan that any withdrawal liability or potential liability, as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA, has been
incurred. With respect to each Plan that is a Multiemployer Plan, except as set
forth in the Employee Benefits Schedule: (1) none of the Company and its
Subsidiaries, nor any of the respective ERISA Affiliates has received any
written notification, nor does the Company have Knowledge that any such Plan is
in reorganization, has been terminated or is insolvent, or (2) reasonably
expected to be in reorganization, to be insolvent, or to be terminated, and (3)
the Company and its Subsidiaries and their respective ERISA Affiliates have made
all required contributions to such Plans substantially when due.
(g) The Company has not incurred any liability (i) under Title TV of
ERISA, (h) under section 302 of ERISA, (iii) under sections 412 and 4971 of the
Code, (iv) as a result of a failure
-21-
to comply with the continuation coverage requirements of section 601 et seq. of
ERISA and section 4980B of the Code, (v) under Section 701, et seq. of ERISA, or
(vi) under corresponding or similar provisions of foreign laws or regulations
that would be a liability of the Company following the Effective Time, other
than such liabilities under the Plans, or where such liability would not
individually or in the aggregate have a Material Adverse Effect on the Company.
No Plan subject to Title IV of ERISA nor any related trusts have been terminated
or is or has been the subject of termination proceedings pursuant to Title TV of
ERISA. Neither the Company nor any ERISA Affiliate of the Company has engaged in
any transaction described in Section 4069 or Sections 4204 or 4212(c) of ERISA.
(h) Except as disclosed in the Employee Benefits Schedule or the SEC
Reports. the Company has no liability for life, health, medical or other welfare
benefits to former employees or beneficiaries or dependents thereof, except for
health continuation coverage as required by Section 4980B of the Code or Parts 6
and 7 of Title 1 of ERISA.
(i) Except as disclosed in the Employee Benefits Schedule, the
Contracts Schedule and the Employee Arrangements Schedule, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in conjunction with any other event)
result in. cause the accelerated vesting or delivery of, or increase the amount
or value of, any payment or benefit to any employee, officer or director of the
Company or any of its Subsidiaries.
SECTION 4.18 Insurance. The attached Insurance Schedule lists the
---------
material insurance policies maintained by the Company and its Subsidiaries and
their respective coverage and renewal dates. All of such insurance policies are
in full force and effect and the Company is not in material default with respect
to its obligations under any of such insurance policies. No notice of
cancellation or termination or rejection of any claim in excess of S 1,000,000
has been received by the Company or its Subsidiaries with respect to any such
policy in the last year (or such shorter period as such entity has been in
existence or has been a Subsidiary of the Company). The Company and each of its
Subsidiaries has been covered during the past five years (or such shorter period
as such entity has been in existence or has been a Subsidiary of the Company) by
insurance in scope and amount customary and reasonable for the businesses in
which they have engaged during such period, and to the Company's Knowledge, all
contractors, lessees and licensees which performed services and/or engaged in
the production of coal on behalf of the Company have been covered by insurance
in scope and amount customary and reasonable for the business in which they have
engaged during such period.
SECTION 4.19 Compliance with Laws. Except as set forth on the Legal
--------------------
Compliance Schedule, the Taxes Schedule, the Developments Schedule or the
Litigation Schedule, to the Company's Knowledge, the Company and each of its
Subsidiaries is in compliance with every statute, rule, restriction, law,
regulation, order, judgment or decree of any governmental entity applicable to
it or by which it is bound (other than Environmental and Safety Requirements and
any permit requirements or related regulations), including, without limitation,
the Fair Labor Standards
-22-
Act or regulations under such act or other laws and regulations relating to
wages, hours, labor agreements, the payment of Social Security and similar
taxes, unemployment or workers' compensation including Black Lung benefits and
obligations and the West Virginia Wage Payment Collections Payment Act and/or
similar state laws and regulations, except for such failures as would not have a
Material Adverse Effect on the Company. Except as set forth on the Legal
Compliance Schedule, the Taxes Schedule or the Developments Schedule, neither
the Company nor any Subsidiary has received from any governmental or regulatory
authority any written notice alleging any material violation of law or claiming
any material liability of the Company or any of its Subsidiaries as a result of
any such alleged material violation.
SECTION 4.20 Environmental, Mining and Safety Matters. Except as
----------------------------------------
set forth on the attached Environmental Compliance Schedule:
(a) The Company and its Subsidiaries are in compliance in all material
respects with all Environmental, Mining, and Safety Requirements (including
without limitation in cases where the Company or its Subsidiaries operate any
property or facility under a contractual arrangement but are not the named
permittee under relevant surface mining permits), and have filed all notices and
compliance reports required to be filed to maintain such compliance in all
material respects under any Environmental, Mining, and Safety requirements
(including without limitation. where material, notices and reports indicating
past or present treatment, storage or disposal, or reporting a spill or release
into the environmental, of any Hazardous Substances, Oils, Pollutants or
Contaminants), and (i) neither the Company nor any of its Subsidiaries has
received any written communication or other written notice from any Government
Entity (which has not been substantially resolved) alleging that the Company or
any of its Subsidiaries is not in compliance, in all material respects, with
Environmental, Mining, and Safety Requirements, (ii) to the Company's Knowledge
all contract mining activities performed on Real Property owned or leased by the
Company or any of its. Subsidiaries are in compliance, in all material respects,
with all Environmental, Mining, and Safety Requirements, (iii) to the Company's
Knowledge, no material action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against or
otherwise given to the Company or any of its Subsidiaries alleging any failure
so to comply in all material respects, and, to the Company's Knowledge, no such
action, suit, proceeding, hearing, investigation, charge, complaint, claim
demand or notice has been threatened, and (iv) neither the Company nor any of
its Subsidiaries has any material contingent liabilities with respect to its
business under any Environmental, Mining, or Safety Requirements.
(b) (i) Neither the Company nor any of its Subsidiaries has received
notice to the effect that it is a potentially responsible party, or that any
Governmental Entity or other individual is seeking information in connection
with or advising it that it is responsible for, or potentially responsible for
costs under Environmental, Mining, and Safety Requirements, including, without
limitation, CERCLA, for cleanup of or investigatory, remedial, or other
corrective action related to Hazardous Substances, Oils, Pollutants or
Contaminants at any Real Property currently or previously owned or leased by the
Company or any of its Subsidiaries at any other location, (ii) no Real Property
owned or leased by the Company nor any of its Subsidiaries is listed on any
federal or state
-23-
contaminated site list, including the national priority list under CERCLA, the
CERCLTS, or any state counterparts, and (iii) neither the Company nor any of its
Subsidiaries has knowledge of any release of Hazardous Substances, Oils,
Pollutants, or Contaminants in quantities requiring investigation or cleanup at
any of the Real Property owned or leased by the Company or any of its
Subsidiaries or at any location where, in any of the foregoing cases (i)-(iii)
the Company or any of its Subsidiaries could reasonably be excepted to bear
material liability.
(c) Each of the Company and its Subsidiaries has provided the
Purchaser (to the extent in the possession of the Company or its Subsidiaries)
with all material environmental audits. site assessments, or reports, all
Environmental Impact Statements, and all liability studies prepared within the
past five years by or for the Company or any of its Subsidiaries, or by any
third party, including Government Entities or insurance companies.
(d) For purposes of this Agreement, "Release" shall mean any emission,
spill, release, discharge or threatened release into or upon: (i) the air. (ii)
the soils or any improvements located thereon; (iii) the surface water or ground
water, or (iv) the sewer, septic system or waste treatment, storage or disposal
system.
SECTION 4.21 Affiliated Transactions. Except as set forth on the
-----------------------
Affiliated Transactions Schedule, the Employee Benefits Schedule, the
Developments Schedule or the contracts Schedule, no officer, director, or
principal stockholder of the Company or, to the Company's Knowledge, any
individual in such officer's or directors immediate family is a party to any
material agreement, contract, commitment or transaction with the Company or any
of its Subsidiaries or has any interest in any material real or personal
property used by the Company or any of its Subsidiaries other than arrangements
with employees that are available to similarly situated employees.
SECTION 4.22 Brokers. Except for the fees of CSFB pursuant to the
-------
engagement letter listed on the Contracts Schedule, none of the Company, any of
its Subsidiaries.. or any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement.
SECTION 4.23 Labor Relations. Except as set forth in the Compliance
---------------
Schedule or the Litigation Schedule:
(a) The Company and its Subsidiaries are in compliance with applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, excluding Environmental and Safety Requirements,
except for such failures as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company and its Subsidiaries are in
compliance with applicable collective bargaining agreements, and arbitration,
administrative and judicial decisions interpreting and/or affecting such
agreements, except for such failures as would not individually or in the
aggregate, have a Material Adverse Effect on the Company.
-24-
(b) There is no unfair labor practice charge or complaint or any other
labor employment matter against or involving the Company or any Subsidiary
pending or threatened before the National Labor Relations Board or any court of
law as of the date of this Agreement. There is, and, except as disclosed on the
Compliance Schedule, since January 1, 1996 there has been, no labor organizing
activity, strike, dispute, lockout, slowdown or stoppage actually pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened against the
Company or any of its Subsidiaries.
(c) There is, and except as disclosed on the Compliance Schedule,
since January 1, 1994 there has been, no certified collective bargaining
representative of the Company's or any of its Subsidiaries' employees, no demand
made to the Company or its Subsidiaries for recognition by any collective
bargaining representative, and no petition for an election filed with the
National Labor Relations Board or any other governmental authority or Person
with respect to the Company's or any of its Subsidiaries employees.
(d) Except as set forth on the Litigation Schedule, there are no
charges, investigations administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, color, religion, national origin, sexual preference, disability, handicap
or veteran status) pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened before the Equal Employment Opportunity Commission or
any federal, state or local agency or court against the Company or any
Subsidiary.
SECTION 4.24 Permit Blocking. Except as set forth in the Compliance
---------------
Schedule or Litigation Schedule, neither the Company nor any of its Subsidiaries
has been notified in writing by the Federal Office of Surface Mining or the
agency of any state administering the Surface Mining Control and Reclamation Act
of 1977, as amended ("SMCRA"), or any comparable state statute, that it is (i)
ineligible to receive additional surface mining permits that arc material to its
business; or (ii) under investigation to determine whether its eligibility to
receive such permits should be revoked, i.e., "permit block," and, to the
----
Company's Knowledge, there is no basis therefor.
SECTION 4.25 Section 6 of the Joint Development Agreement. No
--------------------------------------------
Acquisition Closing (as such term is defined in the Joint Development Agreement)
or other event has occurred. that prevents, prohibits or limits or otherwise
renders moot any rights of the Company and/or one or more of its Subsidiaries
pursuant to Section 6 of the Joint Development Agreement 1(including, without
limitation, the right thereunder to withdraw from the Project (as defined in the
Joint Development Agreement)).
SECTION 4.26 Takeover Provisions Inapplicable. Assuming the
--------------------------------
accuracy and correctness or Section 5.06 hereof as of the date hereof and at all
times on or prior to the Effective Time, Section 203 of the GCL is and shall be
inapplicable to the Merger and the transactions contemplated hereby.
-25-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and wan-ant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Parent is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Delaware. The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Parent and
Purchaser each have the requisite corporate power and authority to own, operate
or lease its properties and to carry on its business as it is now being
conducted and to enter into this Agreement and to perform all of their
respective obligations hereunder.
SECTION 5.02 Authority Relative to this Agreement. The execution
------------------------------------
and delivery of this Agreement by Parent and the Purchaser and the consummation
by Parent and the Purchaser of the transactions contemplated hereby have been
duly and validly authorized and approved by the Boards of Directors of Parent
and the Purchaser and by Parent as stockholder of the Purchaser and no other
corporate proceedings on the part of Parent or the Purchaser are necessary to
authorize or approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company, each such agreement constitutes a valid
and binding obligation of each of Parent and the Purchaser enforceable against
each of them in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.
SECTION 5.03 No Conflict: Required Filings and Consents.
-------------------------------------------
(a) None of the execution and delivery of this Agreement by Parent or
the Purchaser, the consummation by Parent or the Purchaser of the transactions
contemplated hereby or compliance by Parent or the Purchaser with any of the
provisions hereof will (i) conflict with or violate the organizational documents
of Parent or the Purchaser, (ii) conflict with or violate any statute,
ordinance, rule, regulation, order, judgment or decree applicable to Parent or
the Purchaser, or any of their Subsidiaries, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a Violation pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or the Purchaser, or any of their Subsidiaries, is a party or by
which any of their respective properties or assets may be bound or affected,
except for any such actions which would not have a material adverse effect on
Parent or adversely affect the ability of Parent or the Purchaser to consummate
the transactions contemplated hereby.
(b) None of the execution and delivery of this Agreement by Parent and
the Purchaser, the consummation by Parent and the Purchaser of the transactions
contemplated hereby or compliance by Parent and the Purchaser with any of the
provisions hereof will require any Consent of any Government Entity or third
party, except for (i) compliance with any applicable requirements
-26-
of the Exchange Act, (ii) the filing of a certificate of merger, or, if
permitted, a certificate of ownership and merger, pursuant to the GCL, and (iii)
compliance with the Hart-ScotRodino Act and any requirements of any foreign or
supranational Antitrust Laws, and (iv) Consents the failure of which to obtain
or make would not have a material adverse effect on Parent or adversely affect
the ability of Parent or the Purchaser to consummate the transactions
contemplated hereby.
SECTION 5.04 Information. None of the information supplied or to be
-----------
supplied by Parent and the Purchaser in writing specifically for inclusion in
(a) the Schedule 14D-1. (b) the Offer Documents or (c) the Other Filings will,
at the respective times filed with the SEC or such other Governmental Entity
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.05 Financing. The Purchaser is a newly formed
---------
corporation which has not conducted any business other than in connection with
the transactions contemplated by this Agreement. The Purchaser has received a
written commitment (the "Commitment Letters") to obtain, subject to the terms
and conditions therein, the funds necessary for the consummation of the
transactions contemplated hereby, including payment of the Offer Price and the
Merger Consideration with respect to all Common Shares and all payments with
respect to Options and all related costs and expenses. The Purchaser has
delivered true, correct and complete copies of the Commitment Letters to the
Company. The Purchaser has paid all commitment fees required to be paid and
taken all other actions required to cause such Commitment Letters to be
effective and to constitute the valid commitment of the issuer of such letter,
and each such commitment Letter is a valid and binding commitment of the
Purchaser and the issuer thereof. The Purchaser is not as of the date hereof,
aware of any fact, occurrence or condition that makes any of the assumption
statements therein inaccurate in any material respect or that would cause the
commitment provisions in the Commitment Letters to be terminated or ineffective
or any of the conditions contained therein not to be met.
SECTION 5.06 Parent and Purchaser Not an Interested Stockholder. As
--------------------------------------------------
of the date of this Agreement, neither Parent nor Purchaser nor any of their
affiliates is an "Interested Stockholder" as such term is defined in Section 203
of the GCL.
SECTION 5.07 No Knowledge of Misrepresentations or Omissions.
-----------------------------------------------
Neither Parent nor Purchaser has any actual knowledge that (i) the
representations and warranties of the Company in this Agreement are not true and
correct in all material respects or (ii) there are any material errors in or
material omissions from, the Schedules to this Agreement which Individually or
in the aggregate constitute a Material Adverse Effect on the Company.
SECTION 5.08 Solvency. Assuming the correctness of the
--------
representations and warranties in Article TV hereof the Company and its
Subsidiaries will immediately after the Offer Purchase Closing and immediately
after the Effective Time be solvent and capable of meeting their obligations as
they become due, have assets exceeding their liabilities and have a reasonable
amount of capital for the conduct of their business. Parent and Purchaser will
procure the solvency opinion
-27-
that is required by the Commitment Letters and will provide that such opinion is
addressed to and delivered to the Board as well as to the issuer of the
Commitment Letters. Additionally, Parent and Purchaser will assure that a draft
of such solvency opinion is provided to the Board and counsel to the Company for
their review and comment not less than three days prior to the formal delivery
thereof.
SECTION 5.09 Disclaimer Regarding Estimates and Projections. In
----------------------------------------------
connection with Parent or Purchaser's investigation of the Company and its
Subsidiaries, Parent or Purchaser has received certain Company projections,
including projected statements of income from operations of the Company and its
Subsidiaries for the fiscal year ending in December 1997 and for succeeding
fiscal years and certain business plan information for such fiscal year and
succeeding fiscal years. The Company makes no representation or warranty with
respect to such estimates and projections and other forecasts and plans
(including the reasonableness of the assumptions underlying such estimates and
projections and forecasts). In addition, except as set forth herein. the
Company makes no representation or warranty with respect to information relating
to historical income from operations set forth in the Information Memorandum, in
any supplemental due diligence information provided to Parent or Purchaser, in
connection with discussions or access to management of the Company and its
Subsidiaries, or otherwise, and Parent and Purchaser acknowledge and agree that
it is not relying on such information in any manner whatsoever. The disclosures
in the Schedules hereto are to be taken as relating to the representations and
warranties of the Company as a whole. The inclusion of information in the
Schedules hereto shall not be construed as an admission that such information is
material to the Company or its Subsidiaries. In addition, matters reflected in
the Schedules are not necessary limited to matters required by this Agreement to
be reflected in such Schedules. Such additional matters are set forth for
information purposes only and do not necessarily include other matters of a
similar nature.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as provided
----------------------------------
in Section 6.09 hereof or as otherwise contemplated by this Agreement or with
the written Consent of Parent or as set forth in the Developments or Contracts
Schedule, during the period from the date of this Agreement to the Offer
Purchase Closing, the Company will, and will cause each of its Subsidiaries to,
conduct its operations only in the ordinary course of business consistent with
past practice and will use all reasonable efforts, and will cause each of its
Subsidiaries to use all reasonable efforts, to preserve intact the business
organization of the Company and each of its Subsidiaries, to keep available the
services of its and their present officers and key employees, and to preserve
the good will of those having business relationships with it. Without limiting
the generality of the foregoing, and except as provided in Section 6.09 hereof.
as otherwise contemplated by this Agreement with respect to the Non-Mining
Assets, or with the written consent of Parent or as set forth in the
Developments Schedule or Contracts Schedule, the Company will not, and will not
permit any of its Subsidiaries to, prior to the Effective Time:
-28-
(a) Adopt any amendment to its charter or by-laws or comparable
organizational documents;
(b) Except for issuances of capital stock of the Subsidiaries to the
Company or a wholly owned subsidiary of the Company, and other than the issuance
of Common Shares pursuant to the exercise of Options outstanding on the date
hereof, issue, reissue, pledge or sell, or authorize the issuance, reissuance.
pledge or sale or (i) additional Common Shares or other shares of capital stock
of any class, or securities convertible into Common Shares or other capital
stock of any class. or any rights, warrants or options to acquire any
convertible securities or capital stock, or (ii) any other securities in respect
of, in lieu of, or in substitution for, Common Shares outstanding on the date
hereof.
(c) Declare, set aside or pay any dividend or other distribution
(whether in cash. securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between any of the
Company and any of its wholly owned Subsidiaries.
(d) Split, combine, subdivide, reclassify or redeem. purchase or
otherwise acquire, or propose to redeem, purchase or otherwise acquire, any
Common Shares or any other capital stock;
(e) Make any loans, advances or capital contributions to, or
investments in, any other person in excess of $500,000, except for loans,
advances, capital contributions or investments between any Subsidiary of the
Company and the Company or another wholly owned subsidiary of the Company;
(f) Fail to (i) maintain (except for sales or other transactions not
constituting a breach of this Agreement) the Real Property in a manner
consistent with past practice, (ii) pay when due all Taxes, water and sewer
rents, assessments and insurance premiums affecting the Real Property, other
than those being contested in good faith for which appropriate reserves have
been established on the Company's or its Subsidiary's books and records, (iii)
timely comply with the term and provisions of all Leases (including but not
limited to timely payment of all minimum and production royalties, other than
those being contested in good faith for which appropriate reserves have been
established on the Company's or its Subsidiary's books and records), contracts
and agreements relating to or affecting the Real Property and the use and
operation thereof, in each case, other than such failures that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company;
(g) Enter into, establish, adopt, amend or renew any material
employment, consulting, severance or similar agreements or arrangements with any
director, officer or employee; grant any salary or wage increase (other than in
the ordinary course of business consistent with past practice or as may be
required by law); or establish, adopt, amend, or increase benefits under, any
pension, retirement, stock option, stock purchase. savings, profit sharing,
deferred compensation, consulting, welfare benefit contract, plan or arrangement
(other than in the ordinary course of business consistent with past practice or
as may be required by law);
-29-
(h) Enter into any material labor or collective bargaining agreement,
memorandum of understanding, grievance settlement or any other agreement or
commitment to or relating to any labor union, except in the ordinary course of
business consistent with past practice;
(i) Take any action that, if taken after March 31, 1999 but prior to
the date hereof, would have caused the representations and warranties contained
in Section 4.08. to be untrue in any material respect;
(j) Consummate its investment in Louisiana Generating LLC,
contemplated by, or waive, modify or terminate in any manner adverse to the
Company its rights under Section 6 of that certain Joint Development Agreement,
dated September 29, 1996, as amended, among the Company, Southern Electric
International, Inc. and NRG Energy Inc. (the "Joint Development Agreement"), in
connection with the transactions contemplated by that certain Asset Purchase and
Reorganization Agreement, dated as of July 3 0, 1996, with Ralph P. Mabey,
Trustee in Bankruptcy of Cajun Electric Power Cooperative, Inc. ("Cajun
Electric"), for the acquisition of substantially all of the non-nuclear assets
of Cajun Electric;
(k) Waive, modify, amend or terminate any confidentiality, standstill
or other similar agreement (each a "Standstill Agreement") to which the Company
or any of its Subsidiaries is a party and which was entered into in correction
with the sale process undertaken by the Company to identify a purchaser of the
Company that resulted in the execution of this Agreement;
(l) or Agree to take any of the foregoing actions prohibited under
Section 6.01.
Notwithstanding the foregoing, nothing herein shall limit the
Company's ability to, nor require the Company to obtain the consent of Parent in
order to sell, convey or otherwise dispose of any of the Non-Mining Assets
referred to on the Non-Mining Assets Schedule attached hereto at any time
following the date hereof in any transaction approved by the Board; provided
that, with respect to any sale of assets, such sale is not to an Affiliate of
the Company, such assets are sold in an arms-length transaction, and the Company
provides at least three business days prior written notice of such sale to
Parent.
SECTION 6.02 Access to Information. From the date of this Agreement
---------------------
until the Closing, the Company will, and will cause its Subsidiaries, and each
of their respective officers, directors, counsel, advisors and representatives
(collectively, the "Company Representatives") to, give Parent and the Purchaser
and their respective officers, employees, counsel, advisors and representatives
(collectively, the "Parent Representatives") full access (subject, however,
during the term of this Agreement and following any termination hereof, to
Parent and Purchaser keeping and causing their respective subsidiaries and
affiliates to keep such information confidential in a manner consistent with
existing confidentiality and similar non-disclosure obligations, including those
contained in the Confidentiality Agreement, and the preservation of attorney
client and work product privileges), during normal business hours, to the
offices and other facilities and to the books and records of the Company and its
Subsidiaries and will cause the Company Representatives to furnish
-30-
Parent, the Purchaser and the Parent Representatives to the extent available
with such financial and operating data and such other information with respect
to the business and operations of the Company and its Subsidiaries as Parent and
the Purchaser may from time to time reasonably request; provided that if the
Company determines in good faith that any such data or information is
competitively sensitive, Parent and the Company will reasonably agree to
appropriate limitations on the dissemination of such information within the
Purchases and Parent's respective organizations. Prior to the Offer Purchase
Closing, neither Parent or Purchaser nor the Parent Representatives shall
contact or in any manner communicate with the employees, customers, lessors and
suppliers of the Company and its Subsidiaries with respect to any matter related
to the transactions contemplated hereby, except with the prior consent of the
Company.
SECTION 6.03 Reasonable Efforts Notice of Certain Developments.
-------------------------------------------------
(a) Subject to the terms and conditions herein provided and to
applicable legal requirements, each of the parties hereto agrees to use
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done (in the case of the Company consistent with the fiduciary
duties of the Company's Board of Directors under applicable law), and to assist
and cooperate with the other parties hereto in doing, as promptly as
practicable, all things necessary, proper or advisable under applicable laws and
regulations to ensure that the conditions set forth in Article VII are satisfied
and to consummate and make effective the transactions contemplated by the Offer,
the Merger and this Agreement.
(b) If at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective Subsidiaries, is discovered by the Company or Parent, as the
case may be, which should be set forth in an amendment to the Offer Documents or
Schedule 14D-9, the discovering party will promptly inform the other party of
such event or circumstance. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
including the execution of additional instruments, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
(c) Parent and Purchaser covenant and agree to do all other things
reasonably necessary to obtain the financing necessary for fulfillment of the
Offer Financing Condition (whether from the issuers of the Commitment Letters or
from other sources), on terms and conditions that are not less favorable in the
aggregate to Parent and Purchaser than those contemplated by the Commitment
Letters.
(d) Parent and Purchaser further covenant and agree that they will
not, at any 'time prior to the termination of this Agreement, terminate or
modify, amend or alter the obligations of the issuer of the Commitment Letter in
any way that would be materially adverse to the Parent's or Purchasees ability
to cause the Offer Financing Condition to be satisfied.
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SECTION 6.04 Consents.
--------
(a) Each party hereby agrees to use its reasonable best efforts to
file the premerger notification report, and all other documents to be filed in
connection therewith, required by the HSR Act and the Premerger Notification
Rules promulgated thereunder with the United States Federal Trade Commission
("FTC") and the United States Department of Justice ("DOJ") as soon as
practicable following the date hereof. but in any event (i) with respect to
Parent and Purchaser, within five days following the date hereof and (ii) with
respect to the Company, within ten days following the date hereof. Each party
shall respond promptly to any request for additional information that may be
issued by either FTC or DOJ and shall use commercially reasonable efforts to
--- ---
assure that the waiting period required by the HSR Act has expired or been
terminated prior to the date that is 20 days following the commencement of the
Offer.
(b) Each of the parties will use commercially reasonable efforts to
obtain as promptly as practicable all Consents of any Governmental Entity or any
other person required in connection with, and waivers of any Violations that may
be caused by, the consummation of the transactions contemplated by the this
Agreement.
(c) In furtherance and not in limitation of the foregoing, Parent
shall use commercially reasonable best efforts to resolve such objections, if
any, as may be asserted with respect to the transactions contemplated by this
Agreement under any antitrust, competition or trade regulatory laws, rules or
regulations of any domestic or foreign government or governmental authority or
any multinational authority ("Antitrust Laws"). If any suit is instituted
challenging any of the transactions contemplated by this Agreement as violative
of any Antitrust Law, Parent shall take such action (including without
limitation, agreeing to hold separate or to divest any of the businesses,
product lines or assets of Parent or any of its affiliates or of any of the
Company, its Subsidiaries or affiliates (a "Business Unit") (but only if the
Business Units required to be held separate or divested do not in the aggregate
have a fair market value of more than $25,000,000 or revenues for the most
recently completed 12 months of more than $25,000,000) as may be required (a) by
the applicable government or governmental or multinational authority (including,
without limitation, the Antitrust Division of the United States Department of
Justice, the Federal Trade Commission or the European Economic Area) in order to
resolve such objections as such government or authority may have to such
transactions under such Antitrust Law, or (b) by any domestic or foreign court
or similar tribunal, in any suit brought by a private party or governmental or
multinational authority challenging the transactions contemplated by this
Agreement as violative of any Antitrust Law, in order to avoid the entry of, or
to effect the dissolution of, any injunction, temporary restraining order or
other order that has the effect of preventing the consummation of any of such
transactions. The entry by a court, in any suit brought by a private party or
governmental or multinational authority challenging the transactions
contemplated by this Agreement as violative of any Antitrust Law, of an order or
decree permitting the transactions contemplated by this Agreement, but requiring
that any Business Units of any of Parent or its affiliates, the Company or its
Subsidiaries or affiliates be divested or held separate by Parent (but only if
such Business Units required to be held separate or divested do not in the
aggregate have a fair market value of more than $25,000,000 or revenues for the
most recently completed 12 months of more than $25,000,000), or that would
otherwise limit Parent's freedom of action with respect to, or its ability to
retain, the Company and
-32-
its Subsidiaries or any portion thereof or any of Parent's or its affiliates'
other assets or businesses, shall not be deemed a failure to satisfy the
conditions specified in Annex I or Section 7.01(b) hereof.
(d) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice or any other domestic or foreign government or governmental or
multinational authority regarding any or the transactions contemplated by this
Agreement. If any party or any affiliate thereof receives a request for
additional information or documentary material from any such government or
authority with respect to the transactions contemplated by this Agreement, then
such party will endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request Parent will advise the
Company promptly in respect of any understandings, undertakings or agreements
(oral or written) which Parent proposes to make or enter into with the Federal
Trade Commission. the Department of Justice, or any other domestic or foreign
government or governmental or multinational authority in connection with the
transactions contemplated by this Agreement.
SECTION 6.05 Public Announcements. Prior to the Closing, except as
--------------------
required by applicable law or by any rule or regulation of the New York Stock
Exchange, no party hereto shall issue any press release or otherwise make any
public statement with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the other parties
hereto. With respect to any public statement of either party that does not
require the consent of the other party, the party making such statement shall
prior to public disclosure thereof, first consult with and provide the other
party a reasonable opportunity to review the contents of such statement.
SECTION 6.06 Employee Benefit Arrangements. Parent shall cause the
-----------------------------
Company to honor 0 accrued obligations as of the date hereof under the employee
arrangements (the "Employee Arrangements") to which the Company or any of its
Subsidiaries is presently a party which are listed in the Employee Arrangements
Schedule and the Developments Schedule in accordance with the terms and
conditions of such arrangement. In addition, from and after the Closing until
the first anniversary of the Closing, subject to the remaining provisions of
this Section 6.06, the Surviving Corporation shall not amend, modify, alter or
terminate any severance or change of control agreements, policies or practices
of the Company or its Subsidiaries, including the SBS Plan; provided that any
such action after the first anniversary of the Closing shall not adversely
affect the accrued or vested rights of any employees or other beneficiaries
which shall have arisen under any severance or change of control agreements,
policies or practices of the Company or its Subsidiaries, including the SBS Plan
prior to such amendment, modification, alteration or termination. Parent shall
cause the Company for a period of one year following the Effective Time, to
continue to provide to employees of the Company and its Subsidiaries who are
employed by the Surviving Corporation (excluding employees covered by collective
bargaining agreements) broad-based employee benefit plans and Employee
Arrangements which are in the aggregate no less favorable than those provided to
such employees as of the date hereof provided that it is understood that the
Surviving Corporation may alter, amend, modify and/or terminate specific benefit
plans and/or arrangements (including Employee Arrangements) subject to the
aggregate limitations set forth above. Subject to the
-33-
foregoing, nothing in this Section shall be deemed to limit or otherwise affect
the right of the Surviving Corporation to terminate employment or change the
place of work. responsibilities, status or designation of any employee or group
of employees as the Surviving Corporation may determine in the exercise of its
business judgment and in compliance with applicable laws. Solely for purposes of
eligibility and vesting under Employee Arrangements (including without
limitation plans or programs of Parent and its affiliates after the Effective
Time), and to the extent permitted by law, all service with the Company or any
of its Subsidiaries or their predecessors prior to the Effective Time shall be
treated as service with Parent and its affiliates (to the extent such service
was recognized by the Company or any of its Subsidiaries for similar purposes
under comparable plans before the Effective Time).
SECTION 6.07 Indemnification.
---------------
(a) Parent agrees that all rights to indemnification now existing in
favor of any director or officer of the Company and its Subsidiaries (the
"Indemnified Parties") as provided in their respective charters or by-laws or,
in an agreement between an Indemnified Party and the Company or one of its
Subsidiaries, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time; provided
--------
that in the event any claim or claims are asserted or made within such six-year
period, a rights to indemnification in respect of any such claim or claims shall
continue until final disposition of any and all such claims. Parent agrees to
cause the Surviving Corporation to honor all rights to indemnification referred
to in the preceding sentence. Without limitation of the foregoing, in the event
any such Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including, without
limitation, the transactions contemplated by this Agreement, occurring prior to,
and including, the Effective Time, Parent will cause to be paid in accordance
with the applicable charters, by-laws and agreements, as incurred such
Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. The Surviving
Corporation shall pay all reasonable expenses, including attorneys' fees, that
may be incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 6.07 subject to the limitations of the
GCL to the extent applicable.
(b) Parent agrees that the Company, and from and after the Effective
Time, the Surviving Corporation shall cause to be maintained in effect for not
less than six years from the Effective Time for the benefit of all current and
former directors and officers of the Company the current policies of the
directors' and officers' liability insurance maintained by the Company;
provided, that the Surviving Corporation may substitute therefor other policies
- - --------
not less advantageous (other than to a de minimus extent) to the beneficiaries
of the current policies and provided that such substitution shall not result in
any gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
-------- -------
be required to pay an annual premium in excess of 300% of the last annual
premium paid by the Company prior to the date hereof which is set forth in the
Insurance Schedule and if the Surviving Corporation is unable to obtain the
insurance required by this Section 6.07(b) it shall obtain as much comparable
insurance as possible for an annual premium equal to such maximum amount.
-34-
SECTION 6.08 Notification of Certain Matters. Parent and the
-------------------------------
Company shall promptly notify each other of (a) (i) it becoming aware of any
fact or event which would be reasonably likely to demonstrate that any
representation or warranty of any party hereto contained in this Agreement was
or is untrue or inaccurate in any material respect as of the date of this
Agreement or (ii) the occurrence or non-occurrence of any fact or event which
would be reasonably likely to cause any material covenant, condition or
agreement of -any party hereto under this Agreement not to be complied with or
satisfied in all material respects and (b) any failure of any party hereto to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder in any material respect; provided, however, that no
-------- -------
such notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder.
SECTION 6.09 No Solicitation; Termination Right.
----------------------------------
(a) The Company agrees that, during the term of this Agreement it
shall not. and shall not authorize support or encourage any of its Subsidiaries
or any of its or its Subsidiaries directors, officers, employees, agents or
representatives. directly or indirectly, to solicit, initiate, encourage,
facilitate or furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any recapitalization,
merger, consolidation or other business combination involving the Company, or
acquisition of any capital stock (other than upon exercise of the Options which
are outstanding as of the dare hereof) or any portion of the assets (except for
acquisition of assets in the ordinary course of business consistent with past
practice) of the Company and its Subsidiaries, or any combination of the
foregoing (a "Competing Transaction"), or negotiate, or otherwise engage in
discussions with any person (other than Parent, the Purchaser or their
respective directors, officers, employees, agents and representatives) for the
purpose! of facilitating any Competing Transaction or enter into any agreement.,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this Agreement;
provided that the Company shall use its reasonable best efforts to ensure that
- - --------
none of its Subsidiaries and none of its or its Subsidiaries' directors,
officers, employees, agents or representatives, directly or indirectly,
undertakes any such actions, and, if the Board learns of any such action, the
Company shall take reasonable steps to cause the party undertaking such action
to cease such action immediately or shall immediately terminate the Company's
and/or any Subsidiary's employment or other relationship with any such director,
officer, employee, agent or representative that breaches this Section 6.09;
provided further that prior to the purchase of the Common Shares by the
- - -------- -------
Purchaser pursuant to the Offer; the Company may furnish information to, and
negotiate or otherwise engage in discussions with, any party who makes a bona
fide proposal regarding a Competing Transaction which was not solicited by the
Company after the date of this Agreement and which does not violate any
Standstill Agreement if and so long as the Board after consultation with its
counsel determines in good faith that failing to consider and cooperate with
such other party regarding such Competing Transaction would constitute a breach
of the fiduciary duties of the Board to the Company's stockholders under
applicable law, and, provided further that in no event does the term "Competing
-------- -------
Transaction" include a sale or other disposition of any of the assets specified
on the Non-Coal Asset Schedule or that is otherwise specifically permitted
hereunder. ne
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Company shall and shall use its reasonable best efforts to cause its
Subsidiaries, directors, officers, employees, agents and representatives
immediately to cease all existing activities, discussions and negotiations with
any parties conducted heretofore with respect to any Competing Transaction. The
Company agrees that neither the Board of Directors nor any committee thereof
will, during the period referenced in the first sentence of this subsection (a),
(A) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent or the Purchase, the Board Recommendation, or (B) approve or
recommend, or propose publicly to approve or recommend, any Competing
Transaction. The foregoing notwithstanding, in the event that prior to the
purchase of Common Shares by the Purchaser pursuant to the Offer the Board of
Directors after consultation with its counsel determines in good faith that
failure to do so will result in breach of the fiduciary duties of the Board to
the Company's stockholders under applicable law, the Board of Directors may
(subject to this and the following sentences) withdraw or modify the Board
Recommendation, provided that it gives Parent three days' prior written notice
of its intention to do so. Any such withdrawal or modification of the Board
Recommendation shall not change the approval of the Board of Directors for
purposes of causing any state takeover statute or other state law to be
inapplicable to the transactions contemplated hereby, including the Offer, the
Merger or the Tender Commitments. The Company shall immediately advise Parent in
writing of the receipt, directly or indirectly, of any inquiries, discussions,
negotiations, or proposals relating to a Competing Transaction, which becomes
known to the Board during the tent of this Agreement. The Company shall keep
Parent fully apprised of the status and terms of any proposal relating to a
Competing Transaction on a current basis.
(b) If, prior to the purchase of Common Shares by the Purchaser
pursuant to the Offer, the Board after consultation with its financial and legal
advisors determines in good faith that any written proposal from a third party
for a Competing Transaction received after the date hereof that was not
solicited by the Company or any of its Subsidiaries or affiliates in violation
of this Agreement (and that does not violate or breach any Standstill Agreement
executed by such party with respect to the Company prior to the date of this
Agreement) is more favorable to the stockholders of the Company from a financial
point of view than the transactions contemplated by this Agreement (including
any adjustment to the terms and conditions of such transaction proposed in
writing by the Company in response to such Competing Transaction) and is in the
best interest of the stockholders of the Company, the Company may terminate this
Agreement at any time prior to the Offer Purchase Closing and enter into a
letter of intent, agreement-in-principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") with respect to such Competing
Transaction provided that, the Company provides written notice of such
termination to Parent at least three full business days prior to the
effectiveness of such termination and, the Company delivers to Parent within
five business days following such termination (A) by check or wire transfer of
same day funds, (i) an amount equal to Parents Costs (as defined in Section
8.02) as the same may have been estimated by Parent in good faith prior to the
date of such delivery (subject to an adjustment payment between the parties upon
Parent's definitive determination of such costs), but in any event not to exceed
$10,000,000, and (ii) the amount of the Termination Fee as provided in Section
8.02 and (13) a written acknowledgment from the Company and the other party to
the Competing Transaction that the Company and such other party have irrevocably
waived any right to contest such payments.
-36-
SECTION 6.10 Cooperation for Financing. The Company agrees that,
-------------------------
during the term of this Agreement it shall provide reasonable cooperation to the
Purchaser to facilitate the Purchaser's efforts to obtain the financing
contemplated by the Commitment Letters (including assisting the Purchaser in
obtaining required consents) and provide all information reasonably requested by
the Purchaser in connection with the Purchaser's efforts to satisfy the Offer
Financing Condition.
SECTION 6.11 Tender Commitments. The Company shall cause each of
------------------
the Stockholders to execute a Tender Commitment. The Company shall not permit
the amendment, modification, release under or otherwise lessen the obligations
of the Stockholders under the Tender Commitments. The Company agrees to enforce
fully and promptly all provisions of the Tender Commitments, including, without
limitation. seeking specific performance of (or other equitable and legal
remedies with respect to) each Stockholder's obligations under its Tender
Commitment.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions. The respective obligations of Parent, the
----------
Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Purchase of Common Shares. The Purchaser shall have accepted for
-------------------------
payment and paid for Common Shares pursuant to the Offer in accordance with the
tern s hereof; provided that this condition shall be deemed to have been
--------
satisfied with respect to Parent and the Purchaser if the Purchaser fails to
accept for payment or pay for Common Shares pursuant to the Offer in violation
of the terms of the Offer.
(b) No Injunctions or Restrictions; Illegality. No (i) order or
------------------------------------------
preliminary or permanent injunction shall be entered in any action or proceeding
before any court of competent jurisdiction or any statute, rule, regulation,
legislation, or order shall be enacted, entered, enforced, promulgated, amended
or issued by any United States legislative body, court, government or
governmental, administrative or regulatory authority or agency (other than the
waiting period provisions of the HSR Act) which shall remain in effect and which
shall have the effect of (x) making illegal or restraining or prohibiting the
making of the Offer, the acceptance for payment of, or payment for, the Common
Shares by Parent, the Purchaser or any other affiliate of Parent, or the
consummation of the Offer or the Merger or (y) imposing material limitations on
the ability of the Purchaser effectively to acquire or hold or exercise full
fights of ownership of the Common Shares, including, without limitation, the
right to vote the Common Shares purchased by the Purchaser on all matters
properly presented to the stockholders of the Company; provided, that Parent, to
the extent provided in this Agreement, shall, if necessary to prevent the taking
of such action, or the enactment, enforcement, promulgation, amendment, issuance
or application of any statute, rule, regulation, legislation, judgment., order
or injunction, offer to accept an order to divest such of the
-37-
Company's or Parent's assets and businesses as may be necessary to forestall
such in unction or order and to hold separate such assets and business pending
such divestiture; (ii) proceeding brought by an administrative agency or
commission or other domestic Governmental Entity seeking any of the foregoing
shall be pending; or (iii) action or proceeding shall be commenced following the
date of this Agreement and be pending before any court of competent jurisdiction
which would have a Material Adverse Effect on the Company.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company (with
any termination by Parent also being an effective termination by the Purchaser):
(a) By the mutual written consent of Parent and the Company;
(b) By the Company if (i) the Purchaser fails to commence the Offer as
provided in Section 1.01 hereof or, (iii) the Purchaser fails to purchase
validly tendered Common Shares in violation of the terms of the Offer or this
Agreement;
(c) By Parent or the Company if the Offer is terminated or withdrawn
pursuant to its terms without any Common Shares being purchased thereunder;
provided, however, that neither Parent nor the Company may terminate this
Agreement pursuant to this Section 8.01 (c) if such party shall have materially
breached this Agreement or, in the case of Parent, if it or the Purchaser is in
material violation of the terms of the Offer.
(d) By Parent or the Company if any court or other Governmental Entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment, decree,
injunction, ruling or other action shall have become final and nonappealable;
provided that the party seeking to terminate the Agreement shall have used its
reasonable efforts to remove or lift such order, decree or ruling;
(e) By Parent or the Company if the Offer Financing Conditions shall
be impossible to satisfy by the end of the twentieth (20th) business day
following commencement of the Offer and by the Parent or the Company if any
other condition set forth in Annex I attached hereto shall be impossible to
satisfy by the end of the thirtieth (30th) business day following commencement
of the Offer unless such circumstance results from the failure of the
terminating party to perform in any material respect its obligations under this
Agreement, provided, however, that the Company may not terminate this Agreement
-------- -------
pursuant to this Section 8.01(e) if Parent waives in writing the relevant
condition (other than the Minimum Condition as defined in Annex I, which cannot
be waived);
-38-
(f) By Parent if prior to the Offer Purchase Closing the Board shall
have withdrawn or modified in a manner adverse to Parent, or refrained from
making the Board Recommendation, or shall have publicly disclosed its intention
to change such recommendation, or shall have failed to reaffirm the Board
Recommendation within five (5) days of receipt from Parent or the Purchaser of a
request to so reaffirm the Board Recommendation, in each case except due to
Parent or Purchaser's material breach of this Agreement or material violation of
the terms of the Offer;
(g) By the Company. pursuant to and in accordance with Section
6.09(b);
(h) By the Company in the event or any breach of the covenants and/or
representations and warranties of Parent and Purchaser contained in this
Agreement which has a material adverse effect on the consummation of the
transactions contemplated by this Agreement; or
(i) By Parent, if any Stockholder who holds more than five percent of
the Shares shall have breached any of his, her or its obligations under the
Tender Commitment.
SECTION 8.02 Effect of Termination; Fees and Expenses.
-----------------------------------------
(a) In the event of the termination of this Agreement pursuant to
Section 8.01, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any party or its directors, officers or
stockholders, other than the provisions of this Section 8.02 and the
confidentiality provisions referenced in the first sentence of Section 6.02,
which shall survive any such termination. Nothing contained in this Section
8.02 shall relieve any party from liability for any breach of this Agreement or
the Confidentiality Agreement, and provided, further, however. that if it shall
be judicially determined that termination of this Agreement was caused by an
intentional breach of this Agreement then, in addition to other remedies at law
or equity for breach of this Agreement, the party so found to have intentionally
breached this Agreement shall indemnify and bold harmless the other parties for
their respective costs, fees and expenses of their counsel, accountants,
financial advisors and other experts and advisors as well as fees and expenses
incident to negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby ("Costs"). If this Agreement is terminated
-----
pursuant to Section 9.01(t) or (g), the Company will within five business days
following any such termination pay to Parent in cash by wire transfer in
immediately available funds to an account designated by Parent (i) in
reimbursement for Parent's expenses an amount equal to the aggregate amount of
Parent's reasonable documented Costs incurred in connection with pursuing the
transactions contemplated by this Agreement, including, without limitation,
legal, accounting and investment banking fees, up to but not in excess of
$10,000,000 in the aggregate and (ii) a payment in an amount equal to
$18,000,000 (the "Termination Fee"). Purchaser shall terminate the Offer as soon
---------------
as practicable following termination of this Agreement for any reason.
-39-
(b) The prevailing party in any legal action undertaken to enforce
this Agreement or any provision hereof shall be entitled to recover from the
other parry the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.03 Amendment. Subject to Section 1.03(c), this Agreement
---------
and the Offer may be amended by the Company, Parent and the Purchaser at any
time before or after any approval of this Agreement by the stockholders of the
Company but, after any the purchase of shares pursuant to the Offer, no
amendment shall be made which decreases the Merger Consideration or which
materially adversely affects the rights of the Company's stockholders hereunder
without the approval of such stockholders. This Agreement and the Offer may not
be amended except by an instrument in writing signed on behalf of all the
parties.
SECTION 8.04 Extension; Waiver. Subject to Section 1.03(c), at any
-----------------
time prior to the Effective Time, the parties hereto may (i) extend the time for
the performance of any of the obligations or other acts of any other party
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other party or in any document, certificate or writing
delivered pursuant hereto by any other party or (iii) waive compliance with any
of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
----------------------------------------------
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 3.02, the last sentence of Section 6.02, Section 6.06 and Section 6.07
shall survive the Effective Time indefinitely (except to the extent a shorter
period of time is explicitly specified therein).
SECTION 9.02 Entire Agreement; Assignment.
----------------------------
(a) This Agreement (including the documents and the instruments
referred to herein) and the letter agreement dated March 62, 1998 between Credit
Suisse First Boston Corporation and Addington Enterprises Inc. (the
"Confidentiality Agreement"), constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party; provided however that after the Effective Time Parent and/or the
Purchaser may, without the consent of the Company, (i) assign their rights under
this Agreement
-40-
to any of their respective Affiliates, or (ii) collaterally assign their rights
under this Agreement to the lender of Parent or the Purchaser. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect
SECTION 9.04 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by overnight courier or facsimile to
the respective parties as follows:
If to Parent or the Purchaser:
AE1 Resources, Inc.
1500 North Big Run Road
Ashland, Kentucky 41102
Attention: Corporate Secretary
Telecopy: (606) 928-0450
With a copy to:
Brown, Todd & Heyburn PLLC
27000 Lexington Financial Center
250 West Main Street
Lexington, Kentucky 40507-1749
Attention: Paul Sullivan
Telecopy: (606) 231-0011
If to the Company:
Zeigler Coal Holding Company
50 Jerome Lane\
Fairview Heights, IL 62208
Attention: Brent L. Motchan, Esq.
Fax: 618-394-2518
Phone: 618-394-2406
-41-
with a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10072-4675
Attention: Glen E. Hess, P.C.
Fax: 212-446-4900
Phone: 212-446-4908
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof or otherwise.
SECTION 9.06 Descriptive Headings. The descriptive headings herein
--------------------
are inserted far convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.08 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and, except with
respect to Sections 2.03(d), 3.01, 3.02 and 6.07 nothing in this Agreement
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.09 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
-42-
ARTICLE X
DEFINITIONS
SECTION 10.0 Certain Definitions. As used in this Agreement:
-------------------
"Active Operating Properties and Reserves" means all property
----------------------------------------
included in mining permits currently issued to the Company or any of its
Subsidiaries or which will be issued prior to the Closing.
"Acquisition Agreement" has the meaning given thereto in Section
---------------------
6.09(b) hereof.
"Affiliate", as applied to any person, shall mean any other person
---------
directly or indirectly controlling, controlled by, or under common control with,
that person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" has the meaning given thereto in the preamble hereof.
---------
"Antitrust Laws" has the meaning given thereto in Section 6.04(b)
--------------
hereof.
"Board" has the meaning given thereto in the recitals hereof.
-----
"Board Recommendation" has the meaning given thereto in Section
--------------------
1.02(a) hereof.
"Certificates" has the meaning given thereto in Section 3.02 hereof.
------------
"Closing" has the meaning given thereto in Section 2.02 hereof.
-------
"Closing Date" the meaning given thereto in Section 2.02 hereof
------------
"Code" has the meaning given thereto in Section 4.17(a) hereof.
----
"Commitment Letter" has the meaning given thereto in Section 5.05
-----------------
hereof.
"Common Share" and "Common Share" have the meaning given thereto in
-------------------------------
the recitals hereof.
"Company" has the meaning given thereto in the first paragraph hereof.
-------
-43-
"Company's Knowledge" and words of similar import shall mean actual
-------------------
knowledge of a particular fact being known by any of (i) the current serving
directors of the Company, (ii) or any of the following officers of the Company:
Chand B. Vyas, Douglas Blackburn, Frank Barkofske and Brent Motchan, (iv) with
respect to labor and employment matters, David Young; (iv) with respect to
information concerning any Subsidiary, division or business unit of the Company,
the president or most senior executive of such Subsidiary, and (v) any person
succeeding to the position currently of any of the persons indicated in clauses
(ii), (iii) and (iv) above.
"Company Representatives" has the meaning given thereto in Section
-----------------------
6.02 hereof.
"Competing Transaction" has the meaning given thereto in Section
---------------------
6.09(a) hereof.
"Confidentiality Agreement" has the meaning given thereto in Section
-------------------------
9.02(a) hereof.
"Consent" has the meaning given thereto in Section 4.05(b) hereof.
-------
"Costs" has the meaning given thereto in Section 8.02 hereof.
-----
"CSFB" has the meaning given thereto in Section 1.02(a) hereof.
----
"December Balance Sheet" has the meaning given thereto in Section
----------------------
4.06(b) hereof.
"Disclosure Schedules" shall mean all of the separate schedules
--------------------
referred to in Article IV and all Supplemental Schedules taken together.
"Dissenting Shares" has the meaning given thereto in Section 3.01
-----------------
hereof.
"Effective Time" has the meaning given thereto in Section 2.02 hereof.
--------------
"Employee Arrangements" has the meaning given thereto in Section 6.06
---------------------
hereof.
"Environmental Mining and Safety Requirements" means all federal,
--------------------------------------------
state and local statutes, regulations, notices of violations, abatement orders,
closure orders, ordinances, permits, judicial and administrative orders and
determinations, and similar provisions having the force and effect of law, and
all common law concerning public health and safety, worker health and safety,
mine health or safety, surface and underground mining, mineral processing or
transport, mine reclamation, pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transport, treatment, storage, disposal,
distribution, release, runoff, containment, control, or cleanup of any Hazardous
Substances, Oils. Pollutants or Contaminants (as such terms as defined in the
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
300.5), and any mining wastes or byproducts as the foregoing are enacted and in
effect an or prior to the date hereof
-44-
"ERISA" has the meaning given thereto in Section 4.17(a) hereof.
-----
"Exchange Act" has the meaning given thereto in Section 4.05 (b)
------------
hereof.
"Expiration Date" has the meaning given thereto in Section 1.01.
---------------
"GAAP" has the meaning given thereto in Section 4.06(b) hereof.
----
"GCL" has the same meaning given thereto in the recitals hereof
---
"Government Entity" has the meaning given thereto in Section 4.05(b)
-----------------
hereof.
"HSR Act" has the meaning given thereto in Section 4-05(b) hereof.
-------
"Indemnified Parties" the meaning given thereto in Section 6.07(a)
-------------------
hereof.
"Information Memorandum" means that certain Offering Memorandum. dated
----------------------
February, 1998, prepared by CSFB regarding the Company and its Subsidiaries.
"Intellectual Property" has the meaning given thereto in Section 4.13
---------------------
hereof.
"Joint Development Agreement" has the meaning given thereto in Section
---------------------------
6.01(j).
"June Balance Sheet" has the meaning given thereto in Section 4.06(b).
------------------
"Liens" means liens, security interests, options, rights of first
-----
refusal, casements, mortgages, charges, pledges, deeds of trust, rights-of-way,
restrictions, encroachments, licenses, leases, permits, security agreements, or
any other encumbrances, restrictions or limitations on the use of real or
personal property, whether or not they constitute specific or floating charges.
"March Balance Sheet" has the meaning given thereto in Section 4-
-------------------
06(b).
"Material Adverse Effect on the Company" has the meaning given thereto
--------------------------------------
in Section 4.01 hereof.
"Material Contract" has the meaning given thereto in Section 4.12(a).
-----------------
"Merger" as the meaning given thereto in the recitals hereof.
------
"Merger Consideration" has the meaning given thereto in Section 2.05
--------------------
hereof.
"Mining Permits" as the meaning given thereto in Section 4.14 hereof.
--------------
-45-
"Multiemployer Plan" has the meaning given thereto in Section 4.17(f)
------------------
hereof.
"Non-Mining Assets" means the operations and business of the Company
-----------------
and its Subsidiaries and any assets related thereto that are described on the
Non-Mining Assets Schedule attached hereto.
"Offer" has the meaning given thereto in the recitals hereof.
-----
"Offer Documents" has the meaning given thereto in Section 1.01 (a)
---------------
hereof.
"Offer Price" has the meaning given thereto in the recitals hereof.
-----------
"Offer Purchase Closing" has the meaning given thereto in Section 1.01
----------------------
(a) hereof.
"Offer to Purchase" has the meaning given thereto in Section 1.01 (a)
-----------------
hereof.
"Operating Facilities" means any real property rights owned, leased or
--------------------
otherwise controlled by the Company or any of its subsidiaries where the Company
or any of its Subsidiaries has facilities currently used in the coal mining
business including office and administrative buildings, mine openings, air
shafts, preparation and processing plants, slurries and gob disposal areas,
retention and drainage ponds, unfinished reclamation areas, coal terminals, and
coal loading and storage facilities..
"Option" has the meaning given thereto in Section 1.04 hereof.
------
"Option Plan" has the meaning given thereto in Section 1.04 hereof.
-----------
"Other Filings" has the meaning given thereto in Section 4.07 hereof.
-------------
"Other Real Property" means any real property rights owned, leased or
-------------------
otherwise controlled by the Company or any of its Subsidiaries other than
"Active Operating Properties and Reserves" and "Operating Facilities."
"Parent" has the meaning given thereto in the first paragraph hereof.
------
"Parent Representatives" has the meaning given thereto in Section 6.02
----------------------
hereof.
"Paying Agents" has the meaning given thereto in Section 3.02 hereof.
-------------
"Pension Plan" has the meaning given thereto in Section 4.17(a)
------------
hereof.
"Permitted Encumbrances" has the meaning given thereto in Section 4.09
----------------------
hereof.
-46-
"Person" or "person" shall include individuals, corporations,
------ ------
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13 (d)(3) of the Exchange Act).
"Permits" has the meaning given thereto in Section 4.15 hereof.
-------
"Plans" has the meaning given thereto in Section 4.17(a) hereof.
-----
"Proxy Statement" has the meaning given thereto in Section 2.08
---------------
(a)(ii) hereof.
"Purchaser" has the meaning given thereto in the first paragraph
---------
hereof.
"Release" has the meaning given thereto in Section 4.20(d) hereof.
-------
"SBS Plan" has the meaning given thereto in Section 1.04.
--------
"Schedule 14D-9" has the meaning given thereto in Section 1.02(a).
--------------
"SEC" has the meaning given thereto in Section 1.01 hereof.
---
"SEC Reports" has the meaning given thereto in Section 4.06(a) hereof.
-----------
"SMCRA" has the meaning given thereto in Section 3.24 hereof.
-----
"Special Meeting" has the meaning given thereto in Section 2.09(a)(1)
---------------
hereof.
"Standstill Agreement" has the meaning given thereto to in Section
--------------------
6.01 (k).
"Stockholder" each or any of Kinman Limited Partnership, Michael K.
-----------
Reilly, Chand B. Vyas, Roland E. Casati and John F. Manley, and such person
collectively are referred to as the "Stockholders."
"Subsidiary" or "Subsidiaries" has the meaning given thereto in
---------- ------------
Section 4.01 hereof.
"Surviving Corporation" has the meaning given thereto in Section 2.01
---------------------
hereof.
"Taxes" mean any federal, state, local, or foreign income, gross
-----
receipts, license. payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits. environmental (including taxes under Code (S) 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property. sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest penalty,
or addition thereto, whether disputed or not.
-47-
"Tax Returns" means any return, declaration, report. estimate, claim
-----------
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Tender Commitment" means each of those certain Support Agreements,
-----------------
dated the date hereof, by and between the Company and each of the Stockholders,
and such agreements collectively are referred to as the "Tender Commitments."
"Violation" has the meaning given them-to in Section 4.05(a) hereof.
---------
"Welfare Plans" has the meaning given thereto in Section 4.17(a)
-------------
hereof.
* * * *
-48-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its responsive officer thereunto duly authorized,
all as of the day and year first above written.
AEI RESOURCES, INC.
By:/s/ Don Brown
-----------------------------------
Name:
Title:
ZEIGLER ACQUISITION CORPORATION
By:/s/ Don Brown
-----------------------------------
Name:
Title:
ZEIGLER COAL HOLDING COMPANY
By:
-----------------------------------
Name:
Title:
-49-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its responsive officer thereunto duly authorized,
all as of the day and year first above written.
AEI RESOURCES, INC.
By:/s/ Don Brown
-----------------------------------
Name:
Title:
ZEIGLER ACQUISITION CORPORATION
By:/s/ Don Brown
-----------------------------------
Name:
Title:
ZEIGLER COAL HOLDING COMPANY
By:/s/ Illegible
-----------------------------------
Name:
Title: President & CEO
-50-
ANNEX I
-------
Conditions to the Offer. Notwithstanding any other provisions of the
-----------------------
Offer, the Purchaser shall not be required to accept for payment or pay for any
tendered Common Shares, unless (1) there are validly tendered and not properly
withdrawn prior to the Expiration Date that number of Common Shares which
represent at least 90% of the total number of outstanding Common Shares on a
fully diluted basis (excluding options tendered for cancellation under Section
1.04) on the date of purchase (the "Minimum Condition"), and (ii) the Purchaser
shall have obtained, as contemplated by the Commitment Letters, on terms that
are not less favorable to Parent and the Purchaser (or from such alternative
financing sources on terms and conditions that are not less favorable to Parent
and the Purchaser than those contemplated by the Commitment Letters), the funds
necessary for the consummation of the transactions contemplated by the Merger
Agreement, including the purchase of all of the Common Shares tendered in the
Offer, payment of the Merger Consideration with respect to all Common Shares,
all payments with respect to Options and all related costs and expenses (the
"Offer Financing Condition"). Furthermore, notwithstanding any other provisions
of the Offer, the Purchaser shall not be required to accept for payment and may;
subject to the terms of the Merger Agreement, amend the Offer, postpone the
acceptance for payment of or payment for tendered Common Shares or terminate the
Offer and not accept for payment any Common Shares if at any time on or after
the date of the Merger Agreement (unless otherwise indicated below) and before
the time of payment for any Common Shares, any of the following events (each, an
"Event") shall occur:
(a) (i) The waiting period applicable to the Offer or the Merger
pursuant to the provisions of the HSR Act and any applicable foreign or
supranational Antitrust Laws shall fail to have expired or to have been
terminated; or (ii) action by the Department of Justice or Federal Trade
Commission or any foreign or supranational agency or entity charged with
enforcement of Antitrust Laws that are applicable to the transactions
contemplated hereby challenging or seeking to enjoin the consummation of the
Offer or the Merger shall have been instituted and be pending; or
(b) Any order or preliminary or permanent injunction shall be entered
in any action or proceeding before any court of competent jurisdiction or any
statute, rule, regulation, legislation. or order shall be enacted, entered,
enforced, promulgated, amended or issued by any United States legislative body,
court, government or governmental, administrative or regulatory authority or
agency (other than the waiting period provisions of the HSR Act) which shall
remain in effect and which shall have the effect of (x) making illegal or
restraining or prohibiting the making of the Offer, the acceptance for payment
of, or payment for, the Common Shares by Parent, the Purchaser or any other
affiliate of Parent, or the consummation of the Offer or the Merger or (y)
imposing material limitations on the ability of the Purchaser effectively to
acquire or hold or exercise full rights of ownership of the Common Shares,
including. without limitation, the right to vote the Common Shares purchased by
the Purchaser on all matters properly presented to the stockholders of the
Company; provided, that Parent, to the extent provided in the Merger Agreement,
shall, if necessary to prevent the taking of such action, or the enactment,
enforcement, promulgation, amendment, issuance or application of any statute,
rule, regulation, legislation, judgment, order or injunction, offer to accept an
order to divest such of the Company's or Parent's assets and businesses as may
be necessary to
I-1
forestall such injunction or order and to hold separate such assets and business
pending such divestiture; (ii) any proceeding brought by am administrative
agency or commission or _______ domestic Governmental Entity seeking any of the
foregoing shall be pending, or (iii) any action or proceeding shall be commenced
following the date of the Merger Agreement and be pending before any court of
competent jurisdiction which would have a Material Adverse Effect on the
Company; or
(c) The Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the Merger
Agreement shall have been terminated in accordance with its terms; or
(d) The Company or any of its Subsidiaries shall have breached one or
more of its representations and warranties set forth in the Merger Agreement or
failed to perform any of its obligations, covenants or agreements under the
Merger Agreement and such breaches or failures to perform shall in the aggregate
materially and adversely affect the ability of Parent to own or control the
Company, its equity securities and its assets; or
(e) On or after the date of the Merger Agreement any Material Adverse
Effect on the Company shall I have occurred or be occurring; or
(f) The representations and warranties set forth in Section 4.03 or
Section 4.25 shall not be true and correct in all material respects.
The Offer shall terminate if the Merger Agreement is terminated pursuant to its
terms. Pursuant to the Merger Agreement, Parent and Purchaser have agreed to use
their respective reasonable best efforts to obtain financing for the Offer and
to cause all other conditions to be fulfilled.
The foregoing conditions are for the benefit of Parent and the Purchaser and may
be asserted by Parent or the Purchaser regardless of the circumstances giving
rise to any such conditions and may be waived by Parent or the Purchaser in
whole or in part at any time and from time to time in their reasonable
discretion, in each case, subject to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such Right shall
be deemed an ongoing Tight which may be asserted at any time and from time to
time.
The capitalized terms used in this Annex I shall have the meanings set forth in
the Agreement to which it is annexed, except that the term "Merger Agreement"
shall be deemed to refer to the Agreement to which this Annex I is appended.
I-2
INTRODUCTION
Reference is made to the Agreement and Plan of Merger Agreement (the
"Agreement"), dated as of August 3, 1998 among Zeigler Coal Holding Company, a
Delaware corporation (the "Company"), Coal Ventures, Inc., a Delaware
corporation ("Parent") and Zeigler Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Purchaser"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
ascribed to such terms in the Agreement.
The following Schedules were prepared by the Company on August 3, 1998
based upon information reasonably available to the Company as of such date. The
following Schedules are subject in their entirety to revision and
supplementation following such date and at any time prior to the Closing. As
revised and supplemented, the following schedules are the "Disclosure Schedules"
referred to in the Agreement.
The Disclosure Schedules are qualified in their entirety by reference to
specific provisions of the Agreement, and are not intended to constitute, and
shall not be construed as constituting, representations or warranties of Seller
except as and to the extent provided in the Agreement. Inclusion of information
herein shall not be construed as an admission that such information is material
to the operations or financial condition of the Company or its Subsidiaries.
Matters reflected in the Disclosure Schedules may not necessarily be
limited to matters strictly required by the Agreement to be reflected in the
Disclosure Schedules. To the extent that any such additional matters are
included they are included for information purposes only. No inference should
be made that all matters of a similar nature are so included in the same or any
other Schedule.
Headings have been inserted on the sections of the Schedules for
convenience of reference only and shall not to any extent have the effect of
amending or changing the express description of the Schedules as set forth in
the Agreement. To the extent that any disclosure set forth in any particular
Schedule is applicable to the disclosure required by any other Schedule included
in the Disclosure Schedules, such disclosure shall for purposes of the Agreement
be deemed to be made on all relevant Schedules.
The information contained herein is in all events subject to the
Confidentiality Agreement.
Ziegler Coal Holding Company
Agreement and Plan of Merger Schedules
Index
TAB SCHEDULE DESCRIPTION
- - --- --------------------
1 Significant Subsidiary Schedule
2 Developments Schedule
3 Owned Real Property Schedule
4 Personal Property Lease Schedule
5 Taxes Schedule
6 Litigation Schedule
7 Options Schedule
8 Contract Schedule
(i) Collective bargaining agreements & labor union contracts
(ii) Bonus, pension, profit sharing, retirement and deferred
compensation plans
(iii) Stock purchase, stock option, stock appreciation plans
(iv) Contract for employment > $250M
(v) Agreements placing liens on company's assets > $1 MM
(vi) Letters of credit and other guarantees > $1 MM
(vii) Coal sales agreements > $3 MM
(viii) Service & purchase contracts > $1 MM
(ix) Other sales contracts > $2 MM
(x) Tariff agreements & transportation agreements
(xi) Contracts limiting business engagements
(xii) Other Material Agreements
(xiii) Power and Energy Agreements
9 Intellectual Property Schedule
10 Mining Permits Schedule
11 Other Permits Schedule
12 Governmental Consents Schedule
13 Employee Benefits Schedule
14 Insurance Schedule
15 Legal Compliance Schedule
16 Environmental Compliance Schedule
17 Affiliated Transactions Schedule
18 Non-Mining Assets Schedule
19 Employee Arrangements Schedule
Zeigler Coal Holding Company
Agreement and Plan of Merger Schedules
Non-Mining Assets Schedule
1. The Assets related to the business conducted by EnerZ Corporation, a
Delaware corporation, including the capital stock of such corporation.
2. The Assets related to the TEK-Coal Joint Venture ("Encoal") including
the Company's equity interest in such joint venture.
3. Any parcel or parcels of real property that are not directly used in
coal mining activities with a value not exceeding $2,million
individually or $10 million in the aggregate.
4. Phoenix Land Company is currently negotiating three transactions to
dispose of mined out properties at Old Ben Mine #24, Old Ben Mine #26
and La Myra (R&F) in return solely for the assumption of reclamation
liabilities. The aggregate liabilities to be assumed by the purchasers
is approximately of $5 million.
5. Phoenix Land Company is currently negotiating to sell 226 acres of
surface land located east of Evansville, Indiana. The anticipated
selling price is $2.0 to 2.3 million.