EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
between
ADDINGTON HOLDING COMPANY, INC.
and
PITTSTON ACQUISITION COMPANY
___________________________________________
Dated as of September 24, 1993
___________________________________________
SALE OF STOCK OF
ADDINGTON, INC.
APPALACHIAN MINING, INC.
APPALACHIAN LAND COMPANY
VANDALIA RESOURCES, INC.
KANAWHA DEVELOPMENT CORPORATION
TABLE OF CONTENTS
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Section Page
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1. Purchase and Sale of the Shares.................................. -1-
2. Closing.......................................................... -3-
3. Conditions to Closing............................................ -4-
(a) Buyer's Obligation........................................ -4-
(b) Seller's Obligation....................................... -7-
(c) Pre-Closing and Post-Closing Actions...................... -10-
(i) Excluded Assets..................................... -10-
(ii) Excluded Liabilities................................ -11-
(iii) Excluded Litigation................................. -12-
4. Representations and Warranties of Seller......................... -13-
(a) Authority................................................. -13-
(b) The Shares................................................ -14-
(c) Organization and Standing of Each Company................. -15-
(d) Capital Stock of Each Company............................. -15-
(e) Equity Interests.......................................... -16-
(f) Financial Statements; Undisclosed
Liabilities............................................... -16-
(g) Taxes..................................................... -17-
(h) Tangible Personal Property................................ -18-
(i) Real Property............................................. -18-
(j) Contracts................................................. -20-
(k) Litigation; Decrees....................................... -23-
(1) Benefit Plans............................................. -24-
(m) Absence of Changes or Events.............................. -27-
(n) Compliance with Applicable Laws........................... -28-
(o) Employee and Labor Relations.............................. -30-
(p) Licenses; Permits......................................... -31-
(q) Bank Accounts and Powers of Attorney...................... -31-
(r) Transaction with Affiliates............................... -31-
(s) West Virginia Business Investment and
Jobs Expansion Tax Credits ("STC")........................ -31-
(t) Patents and trademarks.................................... -32-
(u) Insurance................................................. -32-
(v) As Is..................................................... -33-
5. Covenants........................................................ -33-
5A. Covenants of Seller.............................................. -33-
(a) Access.................................................... -33-
(b) Ordinary Conduct.......................................... -34-
(c) Pro Forma Balance Sheet................................... -36-
(d) Resignations.............................................. -37-
(e) Other Transactions........................................ -37-
(f) Supplemental Disclosure................................... -38-
(g) Trustee and Bank Releases................................. -38-
(h) Other Financial Statements................................ -38-
5B. Covenants of Buyer............................................... -39-
(a) Buyer's Actions........................................... -39-
(b) Supplemental Disclosure................................... -39-
(c) Planned Closing of Any Company Employment
Site...................................................... -40-
(d) Certain Rulings........................................... -40-
6. Representations and Warranties of Buyer........................... -40-
(a) Authority................................................. -40-
(b) Actions and Proceedings, etc.............................. -41-
(c) Consents.................................................. -41-
(d) Qualification............................................. -42-
(e) No Broker................................................. -42-
(f) Investment Intent......................................... -42-
(g) Permit Blocking........................................... -42-
7. Mutual Covenants................................................. -43-
(a) Cooperation............................................... -43-
(b) Best Efforts.............................................. -43-
(c) Antitrust Notification.................................... -44-
(d) Records................................................... -45-
(e) Non-Disclosure............................................ -46-
(f) Litigation Support........................................ -46-
8. Further Assurances............................................... -46-
9. Indemnification................................................... -47-
(a) Tax Indemnification........................................... -47-
(b) Other Indemnification by Seller............................... -49-
(c) Indemnification by Buyer...................................... -50-
(D) Losses Net of Insurance, etc.................................. -52-
(E) Termination of Indemnification................................ -52-
(f) Procedures Relating to Indemnification
(Other than Under Section 9(a) and 9(h))...................... -53-
(g) Procedures Relating to Indemnification
of Tax Claims................................................. -54-
(h) STC Indemnification and Procedures
Relating Thereto.............................................. -55-
10. Tax Matters.................................................... -57-
11. Assignment..................................................... -60-
18. Interpretation................................................. -62-
19. Waiver......................................................... -62-
20. Counterparts................................................... -62-
21. Entire Agreement............................................... -63-
22. Fees........................................................... -63-
23. Severability................................................... -63-
24. Consent to Jurisdiction........................................ -63-
25. Non-solicitation of Personnel.................................. -64-
26. Other Agreement................................................ -64-
27. Governing Law.................................................. -65-
28. Affiliate Defined.............................................. -65-
29. Termination.................................................... -65-
30. Publicity...................................................... -66-
31. Trade Secrets.................................................. -66-
Exhibit 10.1
STOCK PURCHASE AGREEMENT dated as of September 24, 1993, between ADDINGTON
HOLDING COMPANY, INC., a Delaware corporation ("Seller"), and PITTSTON
ACQUISITION COMPANY, a Virginia Corporation ("Buyer")
Buyer desires to purchase from Seller, and Seller desires to sell to Buyer,
all the issued and outstanding shares of Common Stock (the "Shares"), of
Addington, Inc., Appalachian Mining, Inc., Appalachian Land Company, Vandalia
Resources, Inc. and Kanawha Development Corporation (each, as well as Ironton
Coal Company, a wholly owned subsidiary of Addington, Inc., hereinafter referred
to as "Company" and collectively as the "Companies"), such Shares being more
fully described on Schedule 1 attached hereto.
Accordingly, the parties hereto hereby agree as follows:
1. Purchase and Sale of the Shares. (a) On the terms and subject to the
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conditions of this Agreement, Seller will sell, transfer and deliver or cause to
be sold, transferred and delivered to Buyer, and Buyer will purchase from
Seller, free and clear of all liens, claims and encumbrances of any king, the
Shares for an aggregate purchase price (the "Purchase Price") of One Hundred
Fifty Seven Million ($157,000,000) dollars cash.
(b) Within 60 days after the Closing Date, Seller will prepare and
deliver to Buyer a statement of working capital for the Companies (the "Working
Capital Statement") showing the Companies' Combined Net Working Capital as of
the close of business on the Closing Date. "Companies' Combined Net Working
Capital" means current assets minus current liabilities of the Companies on a
combined basis determined after giving effect to the transactions to be
consummated prior to or at the Closing (eliminating the working capital effect
of any Excluded Assets and Excluded Liabilities to be distributed out of the
Companies prior to the Closing and the current portion of any liability for
which the Companies shall not be responsible), with current assets and current
liabilities accounts calculated in accordance with
generally accepted accounting principles ("GAAP"), and on a basis, consistent
with the past accounting practices of the Companies, except to the extent the
same is modified by the agreement of the parties to compute the deferred
overburden, pit inventory and current portion of accrued reclamation, accrued
expenses and other calculations, the method of such computation being set out in
Schedule 1(b) and except as modified and reflected in the current assets and
current liabilities accounts on the Pro Forma Balance Sheet Attached as Schedule
5A (c) (except to the extent inconsistent with Schedule 1(b)).
(c) Within 10 days after the determination of the Companies' Combined
Net Working Capital (as provided in Section 1(b) above), (i) if the Companies's
Combined Net Working Capital exceeds $0.00, Buyer shall cause the Companies to
distribute to Seller or Buyer shall pay to Seller an amount equal to the
difference between the Companies' Combined Net Working Capital and $0.00, or
(ii) if the Companies' Combined Net Working Capital is less than $0.00, Seller
shall pay to the Companies or Buyer an amount equal to the difference between
the Companies's Combined Net Working Capital and $0.00. Any adjustment
pursuant to this Section shall be paid in cash by Buyer or Seller as applicable,
within 10 days after determination of the Companies' Combined Net Working
Capital, by wire transfer of immediately available funds to a bank account
designated in writing by the party receiving payment.
(d) The Working Capital Statement will become final for all purposes
30 days after receipt by Buyer unless Buyer has delivered a detailed statement
describing its objections thereto. Buyer and Seller will use reasonable efforts
to resolve any such objections. If the parties do not achieve a final resolution
withing 15 days after Seller has received the statement of objections, Buyer and
Seller will within 10 days select a mutually acceptable accounting firm to
resolve any remaining objections. If Buyer and Seller are unable to agree on
the choice of an accounting firm, they will select a nationally recognized
accounting firm by lot (after excluding their respective regular outside
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auditors). the selected accounting firm shall be retained jointly by the
parties on the condition, among other things, that it shall notify the parties
of its determination withing 30 days after its selection. The determination of
the accounting firm so selected regarding the matters in dispute will be set
forth in writing and will be conclusive and binding upon the parties and the
Working Capital Statement shall thereupon become final. The parties shall each
pay one-half of the fees and expenses of such accounting firm.
(e) Buyer will make the books, records and financial staff of the
Companies available to Seller, its accountants and other representatives at
reasonable times and upon reasonable notice during the preparation by Seller of
the Working Capital Statement and the resolution by the parties of any
objections thereto.
2. Closing. (a) The closing (the "Closing") of the purchase and sale of
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the Shares shall be held at the offices of Jackson & Kelly, 1600 Laidley Tower,
Charleston, West Virginia at 10:00 a.m. on the date (the "Closing Date") which
is 10 business days following the date on which the parties mutually agree that
the conditions to the closing set forth in Section 3 of this Agreement have been
or will be satisfied (or waived) by the Closing Date; provided, that the Closing
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Date shall not be earlier than 40 days after the Date on which Buyer shall have
been provided the financial statements referred to in Section 5A(h); provided
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further, that if the Closing shall not have occurred on or before December 31,
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1993, either party shall have the right to terminate of Sections 5A(e), 5A(h)
and 29. The date on which the Closing shall occur is hereinafter referred to as
the "Closing Date".
(b) At the Closing, (i) Buyer shall deliver to Seller, by wire
transfer to a bank account designated in writing by Seller at least two business
days prior to the Closing Date, immediately available funds in an amount equal
to the sum of (A) the Purchase Price plus (B) the Closing Tax Adjustment Amount
(as defined in Section 9 (a)), and (ii) Seller shall deliver or cause to be
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delivered to Buyer certificates representing the Shares, duly endorsed in blank
or accompanied by stock powers duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed.
3. Conditions to Closing. (a) Buyer's Obligation. The obligation of
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Buyer to purchase and pay for the Shares is subject to the satisfaction (or
waiver by Buyer) as of the Closing of the following conditions:
(i) the representations and warranties of Seller made in this
Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing, as though made on and as of the
Closing Date, and Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to
be preformed or complied with by Seller by the time of the Closing; and
Seller shall have delivered to Buyer a certificate dated the Closing Date
and signed by an authorized officer of Seller confirming the foregoing.
"Material" for purposes of this provision shall mean that the
representations, warranties and covenants shall have an adverse affect on
Buyer of $250,000 or more in aggregate.
(ii) Buyer shall have received an opinion dated the Closing Date of
Brown, Todd & Heyburn, counsel to Seller, substantially in the form of
Exhibit A.
(iii) No injunction or order of any court or administrative agency of
competent jurisdiction shall be in effect, and no statute, rule or
regulation of nay governmental authority or instrumentality shall have been
promulgated or enacted, as of the Closing which restrains or prohibits the
purchase and sale of the Shares.
(iv) No action, suit or other proceeding by any person to restrain or
prohibit the purchase and sale of the Shares shall be pending which in the
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written opinion of Buyer's counsel is reasonably likely to succeed.
(v) The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated.
(vi) Buyer (or its designee) and Seller (or its Designee) shall have
executed an Equipment Payment Agreement pertaining to two high wall mining
units ("HWM Units"), substantially in the form of Exhibit B.
(vii) Addington Mining, Inc. and American Eagle Coal Company shall
have executed a Coal Purchase Agreement providing for the sale by Addington
Mining, Inc. of coal to American Eagle Coal Company, substantially in the
form of Exhibit C.
(viii) Documentation form each of Bank of America National Trust and
Savings Association, successor to Security Pacific National bank (the
"Trustee", as trustee of the 12% Senior Secured Notes of Addington
Resources, Inc. ("ARI") and Pittsburgh National Bank and PNC Bank (the
"Bank", the Seller's primary lender) individually and as agent for itself
and Pittsburgh National Bank, evidencing the release of each Company and
its assets under existing credit agreements, satisfactory to Buyer in its
sole discretion, shall have been obtained.
(ix) Buyer shall have received such other documents as to Seller and
each Company as Buyer's counsel shall reasonably request.
(x) Buyer shall have received all requisite corporate approvals
(including without limitation the approval of the Board of Directors of the
Pittston Company (the ultimate parent of Buyer).
(xi) An affiliate of Seller and Addington, Inc. shall have executed a
Lease Agreement relating to the lease of the accounting building and repair
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shop described on Schedule 3(a)(xi), substantially in the form of Exhibit
D.
(xii) Buyer shall not have received a ruling within 45 days of the
date hereof from the West Virginia Department of Tax and Revenue that its
purchase of the Shares of Appalachian Mining, Inc., Appalachian Land
Company and Vandalia Resources, Inc. and Buyer's and Seller's election to
treat this transaction as an asset purchase for federal income tax purposes
under IRC (S)338(h)(10) will be considered a transfer of qualified
investment to successors under W. Va. Code (S)11-13C-9(b).
(xiii) Buyer shall be satisfied in its sole discretion by not later
than 14 days from the date of this Agreement or three business days
following the date of availability of the appropriate representatives of
each of the coal customers of the Companies identified on Schedule 3(a)
(xiii) that the business and commercial relationship between the Companies
and such customers are not in jeopardy. Failure of Buyer to advise Seller
of its dissatisfaction within the time period specified shall be deemed a
waiver of this condition.
(xiv) ARI shall have executed and delivered a Guaranty Agreement,
substantially in the form of Exhibit E.
(xv) Addington Mining, Inc. and Appalachian Mining, Inc. shall have
executed and delivered a Royalty Agreement, substantially in the form of
Exhibit F.
(xvi) Within five business days after execution of this Agreement,
Seller shall have obtained from the Board of Directors of Seller and
Addington Resources, Inc. approval of the transactions contemplated by this
Agreement and advised Buyer that such approval has been obtained.
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(b) Seller's Obligation. The obligation of Seller to sell and deliver
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the Shares to Buyer is subject to the satisfaction (or waiver by Seller) as of
the Closing of the following condition:
(i) the representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing, as though made on and as of the
Closing Date, and Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to
be performed or complied with by Buyer by the time of the Closing; and
buyer shall have delivered to seller a certificated dated the Closing Date
and signed by an authorized officer of Buyer confirming the forgoing.
"Material" for purposes of this provision shall mean that the
representation, warranty or covenant shall have an adverse affect on Seller
of $250,000 or more in the aggregate.
(ii) Seller shall have received an opinion dated the Closing Date of
Jackson & Kelly, counsel to Buyer, substantially in the form of Exhibit G.
(iii) No injunction or order of any court or administrative agency or
instrumentality shall be in effect, and no statute, rule or regulation of
any governmental authority of competent jurisdiction shall have been
promulgated or enacted, as of the Closing which restrains or prohibits the
purchase and sale of Shares.
(iv) No action, suit or other proceeding by any person to restrain or
prohibit the purchase and sale of Shares shall be pending which in the
written opinion of Seller's counsel is reasonably likely to succeed.
(v) The waiting period under the HSR Act shall have expired or been
terminated.
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(vi) Buyer (or its designee) and Seller (or its designee) shall have
executed an Equipment Payment Agreement pertaining to two HWM Units,
substantially in the form of Exhibit B.
(vii) Addington Mining, Inc. and American Eagle Coal company shall
have executed a Coal Purchase Agreement providing for the sale by Addington
Mining, Inc. of coal to American Eagle Coal Compan8, substantially in the
form of Exhibit C.
(viii) Documentation from each of the Trustee and the Bank evidencing
the release of each Company and its assets under existing credit
agreements, satisfactory to Seller in its sole discretion, shall have been
obtained.
(ix) At or prior to Closing, ARI and its affiliates, principals,
directors, officers and agents of ARI (excluding each Company)
(collectively, the "ARI Group") shall have been removed and released from
any and all liability or obligation under the bonds specified on Schedule
3(b)(ix).
(x) At or prior to Closing, the ARI Group shall have been removed
and released from the guaranties and indemnities under the documents
specified on Schedule 3(b)(x).
(xi) Seller shall have received such other documents as Seller's
counsel shall reasonably request.
(xii) Seller shall have received approval of the transactions
contemplated by this agreement for the Board of Directors and shareholders
of ARI. Seller and its affiliates shall have the right in their sole
discretion, but not the obligation, to structure the transactions
contemplated by this Agreement so that the shareholders of ARI have the
opportunity to exercise dissenters rights with respect to this transaction
and receive fair value for their shares. If Seller makes available
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dissenters rights to the ARI shareholders, then not more than ten percent
of the shareholders shall have exercised such dissenters rights.
(xiii) ARI shall have received an opinion from its financial advisor
to the effect that the sale of the Shares and the transactions contemplated
by this Agreement are fair to the ARI Shareholders from a financial
viewpoint.
(xiv) All consents required under the documents described on
Schedule 3 (b) (xiv) shall have been obtained.
(xv) Pittston Minerals Group, Inc. shall have executed and
delivered a Guaranty Agreement, substantially in the form of Exhibit I.
(xvi) Pittston Minerals Group, Inc. shall have executed and
delivered to ARI an Indemnity Agreement (NERCO), substantially in the form
of Exhibit J.
(xvii) Addington Mining, Inc. and Appalachian Mining, Inc. shall have
executed and delivered a Royalty Agreement, substantially in the form of
Exhibit F.
(xviii) Within five business days of the execution of this Agreement,
Buyer shall have obtained from the Board of Directors of Pittston Minerals
Group, Inc. and the Pittston Company approval of the transactions
contemplated by this Agreement and advised Seller that such approval has
been obtained.
(c) Pre-Closing and Post-Closing Actions.
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(i) Excluded Assets. Seller shall, before the Closing, use
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commercially reasonable efforts to obtain all necessary consents, permits
and transfers of permits, and to take all other steps necessary for the
conveyance, assignment and transfer of certain personal and real property
and other items from the
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Companies to Seller or its affiliates ("Excluded Assets"). "Excluded
Assets" shall include the personal and real property and other items
described on Schedule 3(c)i. With respect to any Excluded Assets which are
unable to be fully conveyed, assigned or transferred out of the Companies
prior to the Closing or in connection with the taking of any action with
respect to those Excluded Assets, Seller shall use commercially reasonable
efforts to obtain all consents, permits and transfers of permits, and to
take all other steps necessary for the conveyance, assignment or transfer
of such Excluded Assets to Seller or its affiliates as soon as its
practicable after the Closing, and Buyer shall cooperate, and shall cause
the Companies to cooperate, with Seller and its affiliates, in all such
efforts, including requesting third parties to consent to such conveyances
and assignments, filing applications for the transfer of regulatory permits
pertaining to the Excluded Assets and executing and delivering such further
instruments and documents as Seller may reasonably request. Seller through
its affiliates shall be allowed to utilize at its sole expense all Excluded
Assets not distributed out prior to the Closing as long as Seller
indemnifies Buyer from and against any liability or loss arising out of
ownership, operation, maintenance or use of the Excluded Assets. As soon as
all necessary consents permits and transfers of permits have been obtained
and all other steps necessary for the conveyance, assignment and transfer
of the Excluded Assets have been taken, Buyer shall cause the Companies or
other successor in interest to the Excluded Assets to execute and deliver
such agreements and instruments as may be necessary or appropriate to
convey, assign or transfer each such Excluded Asset to the designated
affiliate of Seller free and clear of any liens in existence prior to the
Closing. All costs and expenses including Taxes (including any STC
recapture) associated with the transfer of Excluded Assets shall be the
sole responsibility of Seller.
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(ii) Excluded Liabilities. As of the Closing Date, Seller shall
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assume and shall be solely responsible for, and Buyer and the Companies
shall have no responsibility for, any liabilities or obligations of any
Company of any nature, kind or description which arise or accrue with
respect to or are attributable to the following (the "Excluded
Liabilities"):
(A) The ownership, operation and maintenance of the Excluded Assets,
whether before or after the Closing Date.
(B) The litigation (the "Excluded Litigation") specified on Schedule
3(c)(iii) and referred to in Section 3(c)(iii) hereof.
(C) All liabilities for Addington, Inc.'s state workers compensation claims
for traumatic injury and occupational disease where the date of injury or the
even giving rise to the claim or the date of last exposure was prior to the
Closing Date, whether the claim is filed before or after the Closing Date; and
all liabilities for all of Addington, Inc.'s federal claims under 30 U.S.C.
Sections 901-945 to the extent claims were made prior to the Closing Date and to
the EXTENT made by employees of Addington, Inc. who do not work for Addington,
Inc. more than 125 working days after the Closing Date. Addington, Inc.
presently maintains an excess coverage insurance policy which protects it from
amounts in excess of $300,000 per claim. Buyer agrees to cause Addington, Inc.
after closing to cooperate with Seller in continuing such insurance coverage (if
necessary) at Seller's expense until Seller no longer has liability this
provision.
(iii) Excluded Litigation. With respect to the excluded litigation
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specified on Schedule 3(c) (iii) (the "Excluded Litigation"), the parties
agree as follows:
(A) Seller:
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(1) shall assume control of and be responsible for the excluded
Litigation, but the Excluded Litigation shall remain in the Companies,
(2) may contest and defend against the Excluded Litigation in any
manner it reasonably may deem appropriate (including the choice of counsel and
experts),
(3) may consent to the entry of any judgment or enter into any
settlement with respect to the Excluded Litigation without the prior consent of
Buyer or any of the Companies,
(4) shall pay the net amount of any final judgment or settlement
entered into with respect to the claims of any party in the Excluded Litigation
after subtracting any offsets, recoveries from permissible counterclaim, cross
claims or third party pleadings, if any; provided, however, the foregoing shall
in no way limit the right of Seller to exhaust its rights of appeal at its own
cost and expense prior to the payment of any judgement.
(B) After the Closing Date, Buyer will provide, and will cause each of
the Companies to provide, Seller with full access, at any reasonable time and
from time to time, to such information and data relating to the Excluded
Litigation as Seller may reasonably request, and Buyer will furnish and request
independent accountants and outside legal counsel of Buyer or any Company to
furnish to Seller such additional information or documents relating to the
Excluded Litigation in the possession of such persons as Seller may from time to
item reasonably request. In addition, Buyer will cooperate, and will cause each
of the Companies to cooperate, with Seller and its legal counsel in the defense
or contest of the Excluded Litigation, including making available their
respective officers and other personnel to attend hearings, depositions and
trials, as Seller may reasonably request in connection with the defense or
contest of the Excluded Litigation but Seller
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shall reimburse Buyer and each of the Companies for all costs and expenses
incurred in connection therewith.
4. Representations and Warranties of Seller. Seller hereby represents
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and warrants to Buyer as follows:
(a) Authority. Seller is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Delaware. Seller
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. All corporate acts and
other processes required to be taken by Seller to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by Seller and constitutes a valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any lien, claim or
encumbrance of any king upon any of the properties or assets of any Company
under, any provision of (i) the General Corporation Law of the State of Delaware
and the corporation laws of each state of incorporation of each Company and each
state where each Company is qualified or required to be qualified to conduct
business, (ii) the Certificate of Articles of Incorporation or By-laws of each
of Seller or any Company, (iii) any material note, bond, mortgage, indenture,
deed of trust, license, lease, contract, commitment, agreement or arrangement to
which Seller or any company is a party or by which any of their respective
properties or assets are bound except as disclosed on Schedule 4(a) or (iv) any
judgement, order or decree, or material statute, law, ordinance, rule or
regulation applicable to Seller or any company or the
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property or assets of Seller or any Company. Except as disclosed on Schedule
4(a) and except in the ordinary course of business following the Closing, no
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, or any
other third party is required to be obtained or made by or with respect to
Seller or any company or any of their respective affiliates in connection with
(i) the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or (ii) the conduct by any Company of its
business following the Closing as conducted on the date hereof, other than (a)
compliance with and filings under the HSR Act, (B) compliance with and filings
under Section 13(a) or 15(d), as the case may be, of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and (C) compliance with and filings
under various Federal and state environmental and/or mining laws.
(b) The Shares. The Shares are duly authorized and validly issued and
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fully paid and non-assessable. Seller has good and valid title to the Shares,
free and clear of any liens, claims and encumbrances of any kind, except that
the Shares of Addington, Inc. are pledged by such pledge shall be released as of
Closing. Upon delivery to Buyer at the Closing of certificates representing the
Shares, duly endorsed by Seller for transfer to Buyer, and upon Seller's receipt
of the Purchase Price, good and valid title to the shares will pass to Buyer,
free and clear of any liens, claims, encumbrances, security interests, options,
charges and restrictions of any kind. Other than this Agreement, the Shares are
not subject to any voting trust agreement or other contract, agreement,
arrangement, commitment or understanding, including any such agreement,
arrangement, commitment or understanding restricting or otherwise relating to
the voting, dividend rights or disposition of the Shares.
(c) Organization and Standing of Each Company. Each Company is a
-----------------------------------------
corporation duly organized and validly
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existing under the laws of the state identified on Schedule 1. Each Company has
full corporate power and authority and, to the best of Seller's knowledge after
reasonable investigation, possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary (including, without limitation,
all Federal and state mining licenses, permits, approvals and authorizations and
bonds posted in connection therewith, whether pertaining to health or safety,
the environment or otherwise) to enable it to use its corporate name and to own,
lease or otherwise hold its properties and assets and to carry on its business
as presently conducted. Each Company is duly qualified and in good standing to
do business in each jurisdiction (shown on Schedule 1) in which the nature of
its business or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure so to
qualify would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the COMPANY.
Seller has made available to Buyer true and complete copies of the Articles of
Incorporation, as amended to date, and the By-laws, as in effect on the date
hereof, of each COMPANY. The stock certificate and transfer books and the minute
books of each Company (which have been made available for inspection by Buyer)
are true and complete.
(d) Capital Stock of Each Company. The authorized capital stock, par
-----------------------------
value per share, and the number of issued and outstanding shares for each
Company, is set forth on Schedule 1. The Shares are duly authorized and validly
issued and are fully paid and nonassessable. Seller is the registered holder of
the Shares. The Shares have not been issued in violation of, and none of the
Shares is subject to, any preemptive or subscription rights. Except as set
forth above, there are no shares of capital stock or other equity securities of
any Company outstanding. There are no exchangeable securities or other
commitments (other than this Agreement) pursuant to which Seller or any Company
is or may become obligated to issue, sell, purchase, return or redeem any shares
of capital stock or other securities of
-15-
any Company, and there are not any equity securities of any Company reserved for
issuance for any purpose.
(e) Equity Interests. Except as described on Schedule 4(e), no
----------------
Company directly or indirectly owns any capital stock of or other equity
interests in any corporation, partnership or other entity.
(f) Financial Statements; Undisclosed Liabilities.
---------------------------------------------
(i) Within 10 days of the date hereof, Sellers shall have delivered to
Buyer Schedule 4(f)(i) setting forth the audited statement of assets,
liabilities and parent investment of the combined Companies as of December
31, 1991 and as of December 31, 1992 (collectively, the "Balance Sheet"),
and the related statements of operating revenues and expenses and cash flow
of the combined Companies for each of the years in the three year period
ended December 31, 1992 and unaudited statement of assets, liabilities and
parent investment and such related statements for the year to date periods
ended June 30, 1992 and June 30, 1993 (the financial statements described
above, collectively, the "Financial Statements").
(ii) The Financial Statements for all periods presented shall reflect,
in accordance with GAAP and on a consistent basis which is mutually
agreeable to the Buyer and Seller, the accounting results for only the
assets and liabilities and related revenues and expenses of the Companies
to be acquired by the Buyer under this Agreement and any other transactions
contemplated by this Agreement which should appropriately be included.
(iii) Seller agrees to provide access to Buyer upon reasonable
request any other existing financial statements, data or information in the
possession of Seller.
(g) Taxes.
-----
-16-
(i) For purposes of this Agreement, (A) "Tax" or "Taxes" shall mean
all Federal, state, local and foreign taxes and assessments and any other
governmental impositions which may be imposed, no matter how measured or
applied, including all interest, penalties and additions imposed with
respect to such amounts; (B) "Pre-Closing Tax Period" shall mean all
taxable periods ending on or before the Closing Date and the portion ending
on the Closing Date of any taxable period that includes (but does not end
on) such day; and (C) "Code" shall mean the Internal Revenue Code of 1986
and the Regulations thereunder, as amended.
(ii) Except as set forth on Schedule 4(g)(ii) or Schedule 4(l)(ii),
(A) each Company and each affiliated group (within the meaning of Section
1504 of the Code) or consolidated, combined or unitary group (under any
state or local tax law) of which any such COMPANY is or has been a member
(each such group, an "Affiliated Group") has filed or caused to be filed in
a timely manner (within any applicable extension periods) all Tax returns,
reports and forms required to be filed by any taxing authority or any tax
laws, including but not limited to the Code and any applicable state, local
or foreign tax laws, (B) all taxes shown to be due on such returns, reports
and forms have been timely paid in full or will be timely paid in full by
the due date thereof, (C) no tax liens have been filed and no claims are
being asserted in writing with respect to any Taxes and (D) no examinations
or inquiries are currently being conducted by any taxing authority.
(iii) (A) neither Seller nor any of its affiliates has made with
respect to any Company, or any property held by any Company, any consent under
Section 341 of the Code, (B) no property of any Company is "tax-exempt use
property" within the meaning of Section 168(h) of the Code and (C) no Company is
a party to any lease made pursuant to Section 168 (f) (8) of the Internal
Revenue Code of 1954.
-17-
(iv.) Except as set forth in Schedule 4(g)(iv), there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax returns required to be filed with respect to any Company,
and neither any Company nor any Affiliated Group has requested any extension of
time within which to file any Tax return, which return has not yet been filed.
(h) Tangible Personal Property: Schedule 4(h) is a list of each item of
--------------------------
tangible personal property which will be owned or leased by any Company as of
the Closing. Except as described in Schedule 4(h), each Company owns all of its
tangible personal property listed on Schedule 4(h) and all other tangible
personal property reflected on each of its books and records as being owned by
each of it, free and clear of all liens an encumbrances, except for liens for ad
valorem property taxes not yet due and payable, purchase money security
interests arising in the ordinary course of their respective businesses, and
each Company is entitled to possession of its leased tangible personal property
listed on Schedule 4(h), with all such leases being valid and in full force and
effect.
(i) Real Property. Set forth in Schedule 4(i) is (i) a true and complete
-------------
description of all real property which will be owned by each Company as of the
Closing and all buildings and other structures located thereon; (ii) an
identification of all leases, subleases, easements, licenses or other
agreements, together with all amendments thereto, under which each Company will
be, as of the closing, a lessor, lessee, licensor, licensee, grantor, grantee or
other party with respect to any real property or any interest therein (except
where a Company acquired its interest in such real property subject to any of
the foregoing); and (iii) an identification of all options which will be held by
each Company as of the Closing or contractual obligations which will exist on
the Closing Date on the part of each Company to purchase or acquire any interest
in any real property. Except as indicated in Schedule (4)(i), (i) each of
Company owns the real property described in Schedule 4(i)as owned by it in fee,
free and clear of all liens, encumbrances,
-18-
equities, claims, covenants, conditions, reservations, restrictions, easements,
rights, rights of way and other agreements arising by, through or under Seller
or any Company or any of its or their affiliates; (ii) each of the leases,
subleases, easements, licenses, agreements and options described in Schedule
4(i)is a valid, binding, enforceable agreement of each of the parties thereto,
and is in full force and effect, and each Company has performed all covenants
and obligations in all material respects required to be performed by it under
such lease, sublease, easement, license, agreement and option and there exists
no material default or event which, with lapse of time or notice to it, would
constitute a material default by such Company; and (iii)neither Seller nor any
Company has received any notice that a lessor, grantor, licensor or option or
under any of such leases, subleases, easements, licenses, agreements or options
intends to cancel or terminate any of such leases, subleases, agreements,
licenses or options or to exercise or not to exercise any option of any of such
leases, subleases, easements, licenses or agreements. There are no eminent
domain or condemnation proceedings pending or, to the knowledge of Seller,
threatened against any asset or property of any Company.
(j) Contracts. Schedule 4(j) contains a correct and complete list of
---------
agreements, contracts, personal property leases (other than those listed on
Schedule 4(i) and commitments (whether written or oral) to which, as of the
Closing Date, any Company will be a party or which, as of the Closing Date, will
affect or bind any Company or any of this property (except those made in the
ordinary course of business and requiring aggregate future payments or
performance by any Company or receipts having a value of less than $30,000),
including without limitation, the following:
(a) notes, mortgages, indentures, loan or credit agreements, equipment
lease agreements, security agreements and other agreements and
instruments reflecting obligations for borrowed money or other
monetary indebtedness or otherwise relating to the
-19-
borrowing of money by, or the extension of credit to any Company or
related to its business and binding agreements or commitments to enter
into any such agreements or commitments;
(b) management consulting and employment agreements and binding
agreements or commitments to enter into same;
(c) coal sales agreements, purchase orders, contract bids or other
agreements and commitments to sell or offer to sell coal, or to
purchase or offer to purchase coal;
(d) coal sales agency agreements or commitments authorizing any
person to act as agent for the purchase or sale of coal or to
otherwise represent any Company in connection with the purchase
or sale of coal;
(e) contract mining agreements, whether as contract miner or
owner/employer;
(f) processing, storage, loading or transloading agreements or other
agreements or commitments pursuant to which any Company utilizes
or is obligated to utilize any preparation plant, stockpile area,
crushing plant, screening plant, tipple, processing facility, rail
car or unit train loading facility, barge loading facility or
other installation or facility owned, leased or used by it to
process, wash, crush, grade, screen, store, load, transload or
ship coal for persons other than a Company (a "Third Party") or
any agreement or contract pursuant to which any Third Party
utilizes or is obligated to utilize any preparation plant,
stockpile area, crushing plant, screening plant, tipple,
processing facility, rail car or unit train facility, barge
loading facility or other installation
-20-
or facility owned, leased or used by such Third Party to process,
wash, crush, grade, screen, store, load, transload or ship coal
for any Company;
(g) agreements relating to the transportation and movement of coal
mined or sold by any Company or agreements or commitments for any
rates, tariffs or other charges applicable to such transportation
or movement;
(h) agreements to pay any overriding royalty, finder's fee, commission
or other compensation or consideration or to pay any person in
connection with or related to the identification purchase, sale,
leasing or other acquisition of any real property, equipment,
machinery, personal property, lease, contract, opportunity,
permit, license, authorization or other right or asset, tangible
or intangible, of any Company;
(i) option, purchase and sale or lease agreements involving any real
property, equipment, machinery, personal property or other asset,
tangible or intangible;
(j) agreements and purchase orders entered into or issued in the
ordinary course of business for the purchase or sale of goods
(other than coal), services, supplies or capital assets;
(k) joint venture or other agreements involving the sharing of profits
or losses;
(l) contracts or agreements with ARI, Seller, or any subsidiary or
affiliate of either, or any director or officer of ARI, Seller, or
any subsidiary or affiliate of either, or any person who is an
immediate relative of any such person, or
-21-
any combination of such
persons;
(m) outstanding powers of attorney empowering any person company or
other organization to act on behalf of any Company;
(n) outstanding guarantees, subordination agreements, indemnity
agreements and other similar types of agreements, whether or not
entered into in the ordinary course of business, which any Company
is or may become liable for or obligated to discharge, or any
asset of any Company is or may become subject to the satisfaction
of, any indebtedness, obligation, performance or undertaking of
any other person, except for indemnification agreements contained
in any of the instruments listed in the Schedules hereto;
(o) contracts, orders, decrees or judgments preventing or restricting
any Company from carrying on business in any location;
(p) agreements, contracts or commitments relating to the acquisition
of the outstanding capital stock or equity interest of any
business enterprise; and
(q) contracts, commitments or obligations not made in the ordinary
course of business and having unexpired terms in excess of one
year or requiring aggregate future payments or receipts in excess
of 430,000 or otherwise material to the business or operations of
any Company
Seller has provided Buyer with true and complete copies of all such written
leases, agreements, contracts, commitments and related agreements listed on
Schedule 4(j), including all amendments, modifications, waivers and elections
applicable thereto.
-22-
Except as set forth in Schedule 4(j), such leases, agreements,
contracts, commitments and related agreements are valid and binding, enforceable
in accordance with their respective terms (subject to any applicable bankruptcy,
insolvency; fraudulent conveyance, reorganization, moratorium or other similar
laws affecting generally the enforcement of creditors' rights) and are in full
force and effect. Except as disclosed in Schedule 4(j), there is not under any
such lease, contract, agreement, commitment or related agreement, any existing
material breach or material default (or event or condition, which after notice
or lapse of time, or both, would constitute a material breach or material
default), by Seller or any Company , or to the knowledge of Seller any other
party thereto.
(k) Litigation; Decrees. No Company is a party to any lawsuit, claim
-------------------
(including without limitation claims for occupational pneumoconiosis,
occupational injury and occupational disease)), proceeding or investigation, and
no such lawsuit, claim, proceeding or investigation has been threatened in
writing within the last 24 months, as of the date of this Agreement, by or
against or affecting any Company or any of its properties, assets, operations or
businesses other than as set forth on Schedule 4(k). Schedule 4(k)identifies
the items of Excluded Litigation which Seller shall assume control of and be
responsible for pursuant to Section 3(c)(iii) and the items to be retained by
the Companies. No Company is subject to or in default under any material
judgment, order or decree of any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, applicable
to it or any of its properties, assets, operations or businesses.
(1) Benefit Plans. (i) No Company has ever maintained or contributed
-------------
to, or now maintains or contributes to, any "employees pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (referred to herein as a "Pension Plan") or "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) (referred to
-23-
herein as a "Welfare Plan") except such Welfare Plans disclosed on Schedule
4(1)(i). Schedule 4(l)(i) also discloses any deferred compensation plan, bonus
plan, incentive plan, disability or other group insurance plan, stock option
plan, employee stock purchase plan, vacation plan, severance plan, sick leave
plan or policy, holiday plan or policy, maternity leave plan or policy or any
other benefit plan, program, agreement (including employment agreement or union
contracts), arrangements or commitments of any kind, maintained by any Company ,
that is not a Pension Plan or Welfare Plan. Seller has delivered to Buyer true,
complete and correct copies of (A) each plan disclosed on Schedule 4(l)(i) (a
"Company Plan") (or, in the case of any unwritten Company Plans, descriptions
thereof), (B) the most recent annual report on Form 5500 filed with the Internal
Revenue Service with respect to each Company Plan (if any such report was
required by applicable law), (C)the most recent summary plan description for
each Company Plan for which a summary plan description is required by applicable
law and (4) each trust agreement and insurance or annuity contract relating to
any Company Plan.
(ii) Each Company Plan has been administered in all material respects
in accordance with its terms, except as disclosed in Schedule 4(l)(ii). Each
Company, its subsidiaries and all Company Plans are in compliance in all
material respects with the applicable provisions of ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"), except as disclosed in Schedule
4(l)(ii). Except as disclosed in Schedule 4(l)(ii), all reports, returns and
similar documents with respect to the Company Plans required to be filed with
any governmental agency or distributed to any Company Plan participant have been
duly and timely filed or distributed. Except as disclosed in schedule 4(l)(ii),
there are no investigations by any governmental agency, termination proceedings
or other claims (except claims for benefits payable in the normal operation of
the Company Plans), suits or proceedings against or involving any Company Plan
or asserting any rights or claims to benefits under any Company Plan that could
give rise to any material liability, and there are not any facts that
-24-
could give rise to any material liability in the event of any such
investigation, claim, suit or proceeding.
(iii) Schedule 4 (l)(iii) discloses whether each Welfare Plan is
(i) unfunded, (ii) funded through a "welfare benefit fund", as such term is
defined in Section 419(e) of the Code, or other funding mechanism or (iii)
insured. Each Welfare Plan (including any Welfare Plan covering retirees or
other former employees) may be amended or terminated without material liability
to any Company on or at any time after the Closing Date. The Companies and its
subsidiaries comply with the applicable requirements of Section 4980B(f) of the
Code with respect to each Company Plan that is a group health plan, as such term
is defined in Section 5000(b)(1) of the Code.
(iv.) Seller has listed on Schedule 4(l)(iv) each Pension
Plan subject to Title IV of ERISA or section 412 of the Code (a "Seller Pension
Plan") maintained or contributed to by any person or entity that, together with
Seller, is treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code (each a "Commonly Controlled Entity"). Except as disclosed in Schedule
4(1)(iv), (A) all contributions to each Seller Pension Plan that may have been
required to be made in accordance with Section 302 of ERISA or Section 412 of
the Code have been timely made, (B) there has been no application for or waiver
of the minimum funding standards imposed by Section 412 of the Code with respect
to any Seller Pension Plan and (C) no Seller Pension Plan has an "accumulated
funding deficiency" within the meaning of Section 412(a) of the Code as of the
most recent plan year.
(v) Except as disclosed in Schedule 4(l)(v), no Seller Pension
Plan has been terminated nor have there been any "reportable events" (as defined
in Section 4043 of ERISA and the regulations thereunder) with respect thereto.
(vi) With respect to any Seller Pension Plan subject to Title IV
of ERISA, no Commonly Controlled Entity has incurred any material liability to
such Seller
-25-
Pension Plan or to the Pension Benefit Guaranty Corporation other than for the
payment of premiums, all of which have been paid when due.
(vii) Except as disclosed in Schedule 4(l)(vii), at no time within
the five years preceding the Closing Date has Seller or any Commonly Controlled
Entity been required to contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA), and neither Seller nor any Commonly Controlled
Entity has incurred any withdrawal liability, within the meaning of Section 4201
of ERISA, which liability has not been fully paid as of the date hereof, or
announced an intention to withdraw, but not yet completed such withdrawal, from
any multiemployer plan. Except as disclosed on Schedule 4(l)(vii), no action
has been taken and no circumstances exist that, alone or with the passage of
time, could result in either a partial or complete withdrawal from any
multiemployer plan. Schedule 4(l)(vii) lists for each multiemployer plan,
Seller's best estimate of the amount of withdrawal liability that would be
incurred if each Commonly Controlled Entity were to make a complete withdrawal
from such plans of the Closing Date. The aggregate amount of withdrawal
liability from such complete withdrawal from all such plans will not exceed
$10,000.
(viii) Schedule 4(1) (viii) sets forth and identifies all
agreements to which any Company is a party, whether oral or in writing, with
present or former officers, directors or employees of, or consultants to, any
Company which (A) obligate any Company to pay, on any date or dates during the
remaining term of such agreement, an aggregate amount in excess of $10,000, or
(B) cannot be terminated on 60 days' notice.
(ix) Neither any Company nor any related person (within the
meaning of section 9701 (c)(2) of the Code) has any liability under subtitle J
of the Code (Coal Industry Health Benefits).
(x) Except as set forth in Schedule 4(1)(x), no employee or former
employee with any Company or any
-26-
beneficiary thereof will become entitled to any bonus, retirement, severance,
job security or similar benefits or any enhanced benefits as a result of the
transactions contemplated hereby that will constitute a post closing obligation
of any of the Companies.
(m) Absence of Changes or Events. Except as expressly permitted by
----------------------------
the terms of this Agreement (including without limitation the distribution of
Excluded Assets and excess working capital as contemplated by this Agreement),
there has not been any material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of any Company since
June 30, 1993; and Addington Resources, Inc. has caused the business of its
consolidated group (including the companies), since June 30, 1993, to be
conducted in the ordinary course and in substantially the same manner as
presently conducted and has made all reasonable efforts consistent with past
practices to preserve all reasonable efforts consistent with past practices to
preserve the Companies' relationships with customers, suppliers and others with
whom such Company deals, and each such Company has not taken any action that, if
taken after the date hereof, would constitute a breach of any of the covenants
set forth in Section 5A(b).
(n) Compliance with Applicable Laws. (i) Except as set forth in
-------------------------------
Schedule 4(n), each Company is in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any governmental authority or
instrumentality, domestic or foreign (including, without limitation, the Surface
Mining Control and Reclamation Act of 1977, as amended ("SMCRA"), the Federal
Mine Safety and Health Act of 1977, as amended, and the Black Lung Benefits
Reform Act of 1977, as amended), except where noncompliance would not have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of such Company. In addition, each of the
Companies is in material compliance with, and in good standing under, applicable
workers' compensation laws and in material compliance under black lung laws.
Except as
-27-
set forth in Schedule 4(n), Seller has not received any written communication
from a governmental authority that alleges that any Company is not in
compliance, in all material respects, with all material Federal, state, local or
foreign laws, ordinances, rules and regulations.
(ii) Except as set forth in Schedule 4(n), to the best of Seller's
knowledge after reasonable investigation none of the operations or properties of
any Company is the subject of any Federal, state or foreign investigation
evaluating whether any remedial action is needed to respond to a release of any
Hazardous Substance (as hereinafter defined) into the environment, and neither
Seller nor any Company has received any written communication from a
governmental authority that alleges that any Company is not in compliance, and
each Company is in compliance, in all respects, with all Federal, state, local
or foreign laws, ordinances, codes, rules and regulations relating to the
environment ("Environmental Laws"). Except as set forth in Schedule 4(n),
Seller (in respect of the business of each Company)and each Company have filed
all notices and compliance reports required to be filed under Environmental Law
indicating past or present treatment, storage or disposal of a Hazardous
Substance in the environment. Except as set forth in Schedule 4(n), to the best
of Seller's knowledge after reasonable investigation no Company has any material
contingent liabilities in respect of its business in connection with any
Hazardous Substance that individually or in the aggregate would have a material
adverse effect on the business, assets, condition (financial or otherwise) or
results of its operations. "Hazardous Substance" shall mean: (i) any hazardous,
toxic or dangerous waste, substance or material defined as such in (or for
purposes of) the Comprehensive Environmental Response Compensation and Liability
Act, as amended, Super Fund Amendments and Reauthorization Act and so-called
superfund or superlien law, or any other Environmental Law, including
Environmental Laws relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material in
effect on the date of this Agreement, (ii) petroleum, asbestos or PCBs
-28-
and (iii) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Federal, state, foreign or local
governmental authority pursuant to any Environmental Law or any health and
safety or similar law, code, ordinance, rule or regulation, order or decree, and
which may or could pose a hazard to the health and safety of workers at or users
of any properties of any Company or cause offsite damage to adjacent property
owner or cause damage to the environment.
(iii) Neither Seller nor any person or entity "owned or controlled"
by Seller nor any person or entity which "owns or controls" Seller has been
notified by the Federal Office of Surface Mining or the agency of any state
administering the SMCRA (or any comparable state statute), that it is (A)
ineligible to receive additional surface mining permits or (B) under
investigation to determine whether its eligibility to receive such permits
should be revoked, i.e., "permit blocked". As used herein, the terms "owned or
---
controlled" and "owns or controls" shall be defined as set for in 30 C.F.R. (S)
773.5 (1991).
(iv) Except as set forth in Schedule 4(n) (iv), as of the Closing
Date there will be no underground storage tanks on any real property owned or
controlled by any Company.
(o) Employee and Labor Relations. Except as set forth on Schedule
----------------------------
4(o), no Company is a party to, bound by, or negotiating any collective
bargaining agreement or any other agreement with any labor union, association or
other employee group, nor is any employee of any Company represented by any
labor union or similar association. No labor union or employee organization has
been certified or recognized as the collective bargaining representative of any
employees of any Company. There are no formal union organizational campaigns or
representation proceedings underway or to the best of Seller's knowledge pending
or planned with respect to any employees of any Company nor are there any
existing or pending or planned labor strikes, work stoppages,
-29-
slowdowns, disputes, grievances, unfair labor practice charges, labor
arbitration proceedings or other disturbances affecting any employee of any
Company, or affecting operations at or deliveries to any mine or other facility
of any Company. Except as described on Schedule 4(o)or Schedule 4(l)(i), no
Company has any liability for any arrearage of wages or for any delinquent
unemployment, FICA or other employee taxes or for any penalties or interest for
failure to timely pay any such taxes due. No Company has pending against it any
unfair labor practice charges, other administrative charges, claims, grievances
or lawsuits before any court, governmental agency, regulatory body or arbitrator
arising under any Federal or state law, regulation or executive order governing
employment.
(p) Licenses; Permits. Schedule 4(p) sets forth a true and complete
-----------------
list of all material licenses, permits, certificates, bonds, approvals and other
such authorizations issued or granted to each Company by local, state or Federal
governmental authorities or agencies. Except as disclosed on Schedule 4(p), all
material, licenses, permits, certificate, bonds, approvals or other such
authorizations of each Company are validly held by it, each Company has complied
with all material requirements in connection therewith and the same will not be
subject to suspension, modification or revocation as a result of this Agreement
of the consummation of the transactions contemplated hereby. Each Company has
all material licenses, permits, certificates, bonds, approvals and other such
authorizations from local, state or Federal government authorities or agencies
which are necessary for the conduct of each Company's business.
(q) Bank Accounts and Powers of Attorney. Schedule 4(q) contains a
------------------------------------
complete and correct list and summary description showing (i) the name of each
bank in which any Company has an account or safe deposit box and names of all
persons authorized to draw thereon or to have access thereto, and (ii) the names
of all persons, if any, holding powers of attorney from any Company.
-30-
(r) Transaction with Affiliates. Except as set forth in the notes to
---------------------------
the Financial Statements or in the Schedules hereto, no Company has any
outstanding contract agreement or other arrangement with Seller or any of its
affiliates with which will continue in effect subsequent to the Closing.
(s) West Virginia Business Investment and Jobs Expansion Tax Credits
----------------------------------------------------------------
("STC"). Seller's affiliate, Appalachian Mining, Inc. ("AMI") is a participant
- - ------
in a qualified multiyear, multiparticipant STC project (the "Alloy STC
Project"). Neither Seller not its affiliates including Vandalia Resources, Inc.
("Vandalia") and AMI, has since January 29, 1993 taken any action of failed to
take any action or failed to take any action which would impair the status (if
any) which the multiyear, multi participant STC project (the "Vandalia STC
Project") had on January 29, 1993. The Alloy STC Project and the Vandalia STC
Project, are collectively referred to as the "STC Projects". Schedule 4(s)(i)
lists the assets of AMI and of Vandalia which will remain in service in the STC
Projects on the Closing Date and the useful lives that AMI and Vandalia have
respectively assigned to those assets for STC Purposes. Schedule 4 (s)(ii)
lists the actual amounts of credit claimed through 1992 by AMI in the Alloy STC
Project. Schedule 4(s)(iii) lists the "new jobs", as defined in W. Va. Code
(S) 11-13C-4(b) which AMI and Vandalia claim are created as of the Closing Date
in each of the STC Projects. Notwithstanding anything in this Agreement to the
contrary, SELLER DOES NOT REPRESENT, WARRANT OR GUARANTY THAT BUYER OR AMI OR
VANDALIA WILL RECEIVE ANY TAX CREDITS RELATING TO THE STC PROJECTS OR THAT
POSITION TAKEN BY AMI AND VANDALIA AS TO THE "NEW JOBS" LISTED IN SCHEDULE
4(s)(iii) WILL BE ACQUIESCED TO BY THE WEST VIRGINIA DEPARTMENT OF TAX AND
REVENUE.
(t) Patents and trademarks. No Company has any patents, trademarks,
----------------------
tradenames, service marks, copyrights or patent applications pending, and are
not subject to any license agreements with third parties or agreements requiring
royalty or other payments in respect of such matters.
-31-
(u) Insurance. Schedule 4(u) contains a complete and correct list and
---------
summary description of all policies of insurance which are in effect, including
amounts thereof, in which any Company is named as the insured party, has a
beneficial interest or for which it has paid any premiums. Such policies are in
full force and effect and insure all assets and property of each Company against
loss or damage in amounts as set forth in such policies. Until the Closing
Date, Seller will cause each Company to maintain in full force and effect its
presently existing insurance coverage, or insurance comparable to such existing
coverage.
(v) As Is. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN
-----
DOCUMENTS OR INSTRUMENTS EXECUTED PURSUANT TO THIS AGREEMENT, BUYER ACKNOWLEDGES
THAT SELLER HAS MADE NO REPRESENTATIONS REGARDING THE VALUE OR CONDITION OF THE
ASSETS OF THE COMPANIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
ASSETS OF THE COMPANIES WILL BE HELD BY THE COMPANIES AT CLOSING "AS IS, WHERE
IS" WITH NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO TITLE,
OWNERSHIP, USE, POSSESSION, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
QUANTITY OR QUALITY OF RESERVES, MINING COSTS OR RATIOS, GRADE, RECOVERABILITY,
VALUE, MINEABILITY, CONDITION, OPERATION, DESIGN, CAPACITY, TAX, TREATMENT, OR
OTHERWISE, AND ALL SUCH REPRESENTATIONS AND WARRANTIES ARE EXPRESSLY DISCLAIMED.
NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO DIMINISH OR LIMIT THE EXPRESS
REPRESENTATIONS, WARRANTIES OR COVENANTS CONTAINED IN THIS AGREEMENT.
5. Covenants.
---------
5A. Covenants of Seller. Seller covenants and agrees as follows:
-------------------
(a) Access. Seller shall, and shall cause each Company, and its or
------
their officers, directors, employees and agents to, afford the officers,
employees and agents of Buyer complete access at all reasonable times, from the
date hereof to the Closing, to its or their officers, employees, agents,
properties, books, and records, and
-32-
shall furnish Buyer all financial, operating and other data and information as
Buyer, through its officers, employees, or agents, may reasonably request, but
only to the extent that any of the foregoing relates to any Company. Buyer
acknowledges that it has been given access to such information at various times
over the twelve month period preceding this Agreement. Subject to applicable law
or court orders, Buyer shall cause all such information of a non-public nature
provided by Seller, and shall promptly destroy all analyses, compilations,
studies or other documents of or prepared by the Buyer from such non-public
information. If this Agreement is terminated, Buyer shall not use or disclose
any confidential information obtained from Seller or the Companies, or other
information concerning the business or properties of the Seller or the
Companies. Buyer shall be responsible for maintaining the confidentiality of
such confidential and trade secret information and ensuring that such
information is not used or disclosed by its employees, affiliates and agents,
and Buyer shall be responsible for the acts of its agents, employees and
affiliates in that regard.
(b) Ordinary Conduct. Except as set forth on Schedule 5A(b) or
----------------
otherwise expressly permitted by the terms of this Agreement, or as necessary in
connection with taking such actions with regard to the assets and liabilities of
the Companies as are contemplated by this Agreement (including without
limitation the distribution of Excluded and excess working capital as
contemplated by this Agreement), from the date hereof to the Closing, Seller
will cause the business of each Company to be conducted in the ordinary course
in substantially the same manner as presently conducted and will make all reason
efforts consistent with past practices to preserve its relationships with
customers, employees, suppliers and others with whom such Company deals. In
addition, except as set forth on Schedule 5A (b) or other expressly permitted by
the terms of this Agreement (including without limitations the distribution of
Excluded Assets and excess working capital as contemplated by this Agreement),
Seller will not permit any Company to do any
-33-
of the following without the prior written consent of Buyer:
(i) amend its Articles of Incorporation or By-laws;
(ii) declare or pay any dividend or make any other distributions to
its shareholders whether or not upon or in respect of any shares of its
capital stock;
(iii) redeem or otherwise acquire any shares of its capital stock
or issue any capital stock or or any securities convertible into or
exchangeable for any shares of capital stock; any option, warrant or right
relations thereto
(iv) grant to any employee, officer or director any increases in
compensation or benefits, or enter into any employment contract or adopt, amend
or terminate any profit sharing, compensation, bonus, deferred compensation,
pension, retirement or other employee benefit plan, agreement, fund, trust or
arrangement, for the benefit or welfare of any employee;
(v) incur or assume any liabilities, obligations or indebtedness
for borrowed money or guarantee any such liabilities, obligations or
indebtedness;
(vi) permit, allow or suffer any of its assets to be subjected to
any mortgage, pledge, lien, encumbrance, restriction or charge of any kind;
(vii) cancel material indebtedness (individually or in the aggregate)
or waive any claims or rights of substantial value;
(viii) except as contemplated by this Agreement, loan or advance any
amount to, or sell, transfer or lease any of its assets to, or enter into
any agreement or arrangement with Seller or any of its affiliates;
-34-
(ix) make any change in any method of accounting or accounting
practice or policy other then those required by generally accepted
accounting principles;
(x) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets (other then inventory) which are material individually,
or in the aggregate, to such Company;
(xi) make or incur any capital expenditure or expenditures which,
individually, is in excess of $5,000 or, in the aggregate, are in excess of
$25,000;
(xii) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, except in the ordinary course of
business consistent with past practice;
(xiii) enter into any lease of real property;
(xiv) enter into any new commitments for the sale or purchase of
coal the performance of which extends beyond January 31, 1994 or the
purchase or disposition of coal properties or amend any existing coal sales
agreement; or
(xv) agree, whether in writing or otherwise, to do any of the
foregoing.
Seller shall not, and shall not permit any Company to, take any
action that would, or that could reasonably be expected to, result in (i) any of
its representations and warranties set forth in this Agreement becoming untrue
or (ii) any of the conditions to the purchase and sale of the Shares not being
satisfied.
-35-
(c) Pro Forma Balance Sheet. Schedule 5A (c) sets forth a pro forma
-----------------------
balance sheet (the "Pro forma Balance Sheet") reflecting the assets,
liabilities, and working capital which each Company would have had if the
Closing had occurred on June 30, 1993 after the distribution of the Excluded
Assets and Excluded Liabilities.
(d) Resignations. On the Closing Date, Seller shall cause to be
------------
delivered to Buyer duly sided resignations, effective immediately after the
Closing Date, of all officers and directors of each Company and shall take such
other action as is necessary to accomplish the forgoing.
(e) Other Transactions; Seller Beak-Up Fee. Prior to the Closing;
none of Seller, any Company, ARI nor any other affiliate of Seller shall, nor
shall they permit any of their respective officers, directors, or other
representatives to directly or indirectly, encourage, solicit, initiate or
participate in discussions or negotiations with, or provide any information or
assistance to, any corporation, partnership, person, or other entity or group
(other than Buyer and its representatives) concerning any merger, sale of
securities, sale of substantial assets or similar transaction involving any
Company; but the foregoing shall not prohibit Seller or its affiliates from
engaging in discussions or negotiations with, or furnishing information to, a
third party who seeks to initiate such discussions or negotiations following
Seller's receipt of a written proposal which is financially superior as compared
to this Agreement (as determined by Seller's Board of Directors), but only to
the extent that Seller's Board of Directors shall conclude in good faith on the
basis of written advice from Seller's outside securities counsel that such
action is necessary in order for Seller and its board of directors to act in a
manner consistent with its or their fiduciary duties (a "Superior Offer"). In
the event that Seller or any Company receives a Superior Offer, Seller will
promptly notify Buyer of such proposal and keep Buyer fully informed of any
progress, action or event with respect thereto. Upon receipt of
-36-
any such notice from Seller, Buyer shall have the sole and exclusive right to
terminate the obligations of Buyer and Seller under this Agreement; provided
that if ARI or Seller executes an agreement pertaining to a Superior Offer,
Seller shall pay Buyer $15 million as a break-up fee within five business days
of such execution. However, nothing contained in the foregoing provisions of
this Section 5A(e) shall preclude or limit Buyer from pursuing any rights or
remedies against any person or entity who submits any such Superior Offer.
(f) Supplemental Disclosure. Seller shall have the continuing
-----------------------
obligation until the Closing to supplement or amend the Schedules hereto with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in such Schedules; provided, however, that for the purpose of the
-------- -------
rights and obligations of the parties hereunder, any such supplemental or
amended disclosure shall not be deemed to have been disclosed as of the date of
this Agreement unless so agreed in writing by Buyer.
(g) Trustee and Bank Releases. ARI and Seller shall obtain
-------------------------
documentation from each of the Trustee and the Bank evidencing the release of
each Company and its assets under existing credit agreements prior to the
Closing.
(h) Other Financial Statements. On or before October 20, 1993, Seller
--------------------------
acknowledges and agrees to use its best efforts to provide to Buyer unaudited
financial statements described in Section 4 (f)(i) above for the quarter year
and year to date periods ended September 30, 1992 and September 30, 1993 which
shall then be included as a part of the Financial Statements (as defined in
Section 4(f)(i)) If such financial statements are provided to Buyer after
October 20, 1993, the dates specified in Sections 2(a) and 29 shall be extended
for the same number of days between October 20, 1993 and the date such financial
statements are provided to Buyer. Such financial statements shall in any event
be provided to Buyer not later than November 15, 1993.
-37-
5B. Covenants of Buyer. Buyer covenants and agrees as follows:
------------------
(a) Buyer's Actions. Buyer shall not take any action that would, or
---------------
that could reasonably be expected to, result in (i) any of its representations
and warranties set forth in this Agreement becoming untrue in any material
respect, or (ii) any of the conditions to the purchase and sale of the Shares
not being satisfied in any material respect; and buyer shall cooperate with
Seller in the removal of liability and obligations under bonds and guarantees
specified on Schedule 5B(a). Buyer also agrees to provide such financial and
other information of Buyer and of Pittston Minerals Group, Inc. as is necessary
to accomplish such replacement or substitution. Except for the bonds listed on
Schedule 3(b)(ix) and the guarantees specified on Schedule 3(b)(x), if the
removal of liabilities and obligations are unable to be obtained as of the
Closing Date with respect to each of those bonds and guarantees described on
Schedule 5B(a), then in lieu of such removal, Seller will accept an indemnity
substantially in the form of Exhibit H from Pittston Minerals Group, Inc.
("PMGI"), provided that PMGI shall have at least $70 million net worth and debt
not exceeding $90 million (exclusive of debt of the Companies) immediately
following the Closing. After the Closing Date, Buyer shall also continue to also
use its best efforts to remove Seller and its affiliates and its officers from
such liabilities or obligations listed on Schedule 5B(a).
(b) Supplemental Disclosure. Buyer shall have the continuing
-----------------------
obligation until the Closing to supplement, or amend its Schedules with respect
to any matter hereafter arising or discovered which, if existing or known at the
date of this Agreement, would have been required to be set forth or described in
such Schedules; provided, however, that for the purpose of the rights and
obligations of the parties hereunder, any such supplemental or amended
disclosure shall not be deemed to have been disclosed as of the date of this
Agreement unless so agreed in writing by Seller.
-38-
(c) Planned Closing of Any Company Employment Site. Prior to the
----------------------------------------------
Closing, Buyer shall have the continuing obligation to immediately advise Seller
of any planned or intended closing of any Company's employment sites existing
immediately prior to the Closing, or layoff of any Company's employees employed
immediately prior to Closing, where such closing or layoff may or will be
sufficient to invoke coverage of the Worker Adjustment and Retraining
Notification Act of 1989 for such Company.
(d) Certain Rulings. With regard to the ruling referred to in Section
---------------
3(a) (xii), Buyer will make such request for determination with reasonable
diligence.
6. Representations and Warranties of Buyer. Buyer hereby represents
---------------------------------------
and warrants to Seller as follows:
(a) Authority. Buyer is a corporation duly organized, validly
---------
existing and in good standing under the laws of the Commonwealth of Virginia.
Buyer has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. All corporate
acts and other proceedings required to be taken by Buyer to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give right to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
any of the properties or assets of the Company under, any provision of (i) the
-39-
Stock Corporation Act of the Commonwealth of Virginia, (ii) the Articles of
Incorporation or bylaws of Buyer, (iii) any material note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to which Buyer is a party or by which any of its properties are
bound or (iv) any judgment, order, or decree or material statute, law,
ordinance, rule or regulation applicable to Buyer or its property or assets. No
consent, approval, license, permit order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required to be obtained or made by or with respect to Buyer in connection with
the execution and delivery of this Agreement or the consummation by Buyer of the
transactions contemplated hereby, other than (A) compliance with and filings
under the HSR Act and (B) compliance with and filings under Section 13 (a) or 15
(d), as the case may be, of the Exchange Act.
(b) Actions and Proceedings, etc. There are no (I) outstanding
----------------------------
judgements, orders, write, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer which have an adverse effect on the
ability of Buyer to consummate the transactions contemplated hereby or (ii)
actions, suits, claims or legal, administrative or arbitration proceedings or
investigations pending or, to the best knowledge of Buyer, threatened against
Buyer, which are likely to have a material adverse effect on the ability of
Buyer to consummate the transactions contemplated hereby.
(c) Consents. No consent of any party and no consent, license,
--------
approval or authorization of, or exemption by, or filing restriction or
declaration with, any governmental authority, bureau, agency or regulatory
authority is required in connection with the execution, delivery, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby and thereby.
(d) Qualification. Buyer is duly qualified and in good standing to do
-------------
business in each jurisdiction I
-40-
which the nature of its business or the ownership, leasing or holding of its
properties make such qualification necessary, except such jurisdictions where
the failure so to qualify would not have a material adverse effect on the
business, assets, conditions (financial or otherwise) or results of operations
of Buyer. Buyer has made available to Seller true and complete copies of its
Articles of Incorporation, as amended to date, and its By-laws, as in effect on
the date hereof.
(e) No Broker. Buyer has not retained any broker or finder nor has
---------
any finder or broker acted on behalf of Buyer in connection with this Agreement
or the transactions contemplated hereby.
(f) Investment Intent. Buyer is acquiring the Shares solely for
-----------------
its own account for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof, and has no present intention or
plan to effect any resale, assignment or distribution of the of the Shares.
Buyer acknowledges that the Shares have not been registered or qualified under
the Securities Act of 1933 or any state securities laws and may be sold,
assigned, pledge or otherwise disposed of in the absence of such registration
only pursuant to an exemption form such registration. Buyer acknowledges that
the certificates evidencing the Shares shall each bear a restrictive legend to
the foregoing effect. Buyer has received such information from Seller and the
Companies as it has requested and acknowledges that there are no representations
or warranties, express or implied, except as expressly set forth in this
Agreement.
(g) Permit Blocking. Except as set out on Schedule 6 (g), neither
---------------
Buyer nor any person or entity "owned or controlled" by Buyer nor any person or
entity which "owns or controls" Buyer has been notified by the Federal Office of
Surface Mining or the agency of any state administering the SMCRA )or any
comparable state statute), that it is (A) ineligible to receive additional
surface mining permits or (B) under investigation to
-41-
determine whether its eligibility to receive such permits should be revoked,
i.e., "permit blocked". As used herein, the te4rms "owned or controlled" and
"owns or controls" shall be defined as set for in 30 C.F.R. (S) 773.5 (1991).
7. Mutual Covenants. Each of Seller and Buyer covenants and agrees
----------------
as follows:
(a) Cooperation. Buyer and Seller shall cooperate with each other and
-----------
shall cause their officers, employees, agents, auditors and representatives to
cooperate with each other after the Closing to ensure the orderly transition of
each Company from Seller to Buyer and to minimize any disruption to the
respective businesses of Seller, Buyer or any Company that might result from the
transactions contemplated hereby. Neither party shall be required by this
Section 7 (a) to take any action that would unreasonably interfere with the
conduct of business.
(b) Best Efforts. (i) Subject to the terms and conditions of this
------------
Agreement, each party will use its best efforts to cause the consents of or
releases from, as appropriate, the Trustee and the Bank set forth in Section 3
to be obtained and all other conditions to the Closing to occur.
(ii) Seller shall use its best efforts to take, and cause to be taken,
all actions and to do, and cause to be done, all things necessary, proper or
advisable under applicable laws and regulations and otherwise, to obtain prior
to Closing all authorizations, consents and waivers ("Consents") required form
third parties to consummate and make effective the transactions contemplated by
this Agreement (which Consents shall include without limitation those set forth
on Schedule 4 (a)), provided, however, that nothing contained herein shall
require Seller, Buyer or any Company to assume any additional obligation or
incur any additional liability in order to obtain Consents. Buyer shall use its
best efforts to assist and cooperate with Seller in such efforts. Each party
agrees to keep the other fully
-42-
informed with respect to such efforts. In the event any Consent is not obtained
prior to Closing despite the best efforts of Seller and Buyer, Buyer and Seller
shall negotiate in good faith a mutually acceptable solution to the failure to
obtain any required Consent, but if a mutually acceptable solution is not
reached and the failure to obtain such Consent would have material adverse,
consequences to the transactions contemplated by this Agreement, then in such
event the party or parties disadvantaged by failure to obtain such Consent shall
have the right to terminate this Agreement without any further liability to the
other party.
(iii) Notwithstanding the foregoing provisions of Section 7 (b)
(ii), with respect to consents required with respect to the documents specified
on Schedule 3 (b) (xiv) (the "Early Consents"), withing 30 days of execution of
this Agreement, Seller shall advise Buyer of any Early Consents Seller
reasonably determines that it will not be able to obtain prior to Closing.
Buyer shall thereupon have the right for an additional 15 days to pursue the
obtaining of such Early Consents which Seller has determined are not obtainable.
At the expiration of the aforesaid 45 day period, if Buyer and Seller, have not
been able to agree on a mutually acceptable solution to the failure to obtain
any required Early consent, then Seller shall have the right for a period of
five days following expiration of such 45 day period to terminate this Agreement
without any further liability to Buyer.
(c) Antitrust Notification. Each of Seller and Buyer will as promptly
----------------------
as practicable, but in not event later than five business days following the
execution and delivery of this Agreement, file with the United States Federal
trade Commission (the "FTC") and the United States Department of Justice (the
"DOJ") the notification and report form required for the transactions
contemplate hereby and any supplemental information re1uested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information will be in substantial
-43-
compliance with the requirements of the HSR Act. Any such notification and
report form and supplemental information will be in substantial compliance with
the requirements of the HSR Act. Each of Buyer and Seller shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. Seller and Buyer shall keep each other apprized of
the status of any communications with, and inquiries or requests for additional
information from, the FTC and the DOJ and shall comply promptly with any such
inquiry or request. Each of Seller and Buyer will use its best efforts to obtain
any clearance required under the HSR Act for the purchase and sale of the
Shares. Each party shall be responsible for its filing fees relation to the
filing of HSR Act notification and report form.
(d) Records. (i) On the Closing Date, Seller shall deliver or
-------
cause to be delivered or cause to be delivered to Buyer all original agreements,
documents, books, records and files (collectively, "Records"), in the possession
of Seller relating to the business and operations of each Company to the extent
not then in the possession of such Company, subject to the following exceptions:
(A) Buyer recognizes that certain Records may contain incidental
information relating to a Company or may relate primarily to subsidiaries
or divisions of Seller other then such Company, and that Seller may retain
such Records and shall provide copies of the relevant portions thereof to
Buyer; and
(B) Seller may retain any Tax returns, reports or forms, and Buyer
shall be provided with copies of such returns, reports or forms only to the
extent that they relate to any Company's separate returns or separate Tax
liability.
(ii) After the Closing, upon reasonable written notice, Buyer and
Seller agree to furnish or cause to be furnished to each other and their
representatives, employees, counsel and accountants access, during normal
business hours, such information (including Records pertinent to each Company)
and
-44-
assistance relating to any Company as is reasonably necessary for financial
reporting and accounting matters, the preparations and filing of any Tax
returns, reports or forms or the defense of any Tax claim or assessment;
provided, however, that such access does not unreasonably disrupt the normal
- - -------- -------
operations of Seller, Buyer or such Company.
(e) Non-Disclosure. Subject to applicable law or court order, each
--------------
party shall cause all such information of a non-public nature obtained by its
pursuant to this Agreement to be retained confidentially. If this Agreement is
terminated, each party shall promptly return all such information of non-public
nature provided by the other party, shall promptly destroy all analyses,
cumulations, studies or other documents of or prepared by it form such non-
public information, shall not use or disclose any such non-public information to
third parties and shall take reasonable step to cause its agents and employees
to comply with this provision.
(f) Litigation Support. The parties shall cooperate with each other
------------------
in the defense or contest, make available their personnel, and provide such
testimony and reasonable access to their books and records as shall be necessary
in connection with the defense or contest of any action, suit, proceeding,
hearing, investigation, charge, compliant or claim which questions the validity
of this Agreement or seeks to enjoin, retrain or prohibit the transactions
contemplated by this Agreement.
8. Further Assurances. From time to time as and when requested by
------------------
either party hereto, the other party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions, as such other party may
reasonably deem necessary or desirable to consummate the transactions
contemplate by this agreement.
9. Indemnification. (a) Tax Indemnification.
---------------- -------------------
-45-
(i) Seller shall indemnify Buyer and its affiliates (including each
Company) and each of their respective officers, directors, employees and agents
and hold them harmless from (A) all liability for Taxes of any Company for the
Pre-Closing Tax Period, (B) all liability (As a result of Treasury Regulation
(S)1.1502-6 or otherwise) for Taxes of Seller, any Affiliated Group or any
member of any Affiliated Group, (C) all liability for federal and state income
taxes and sales taxes resulting from the Section 338 (g) and 338(h) (10)
elections (or any comparable election under state or local Tax law) contemplated
by Section 10(a) of this Agreement, and (d) all liability for reasonable legal
fees and expenses attributable to any item in clause (A), (B) or (C) above.
(ii) Buyer shall, and shall cause each Company to, indemnify Seller
and its affiliates and each of their respective officers, directors, employees
and agents and hold them harmless from (A) all liability for Taxes of each such
Company (other than Taxes described in clauses (i)(A),(i)(B)or (i)(C) of this
Section 9 (a)) and (B) all liability for reasonable legal fees and expenses
attributable to any item in clause (A) above.
(iii) Any Tax returns (other than those returns relating to an
election made under Section 10 (a) of this Agreement) for the Pre-Closing Tax
Period, the due dates for which returns are not until after Closing and have not
been filed prior to Closing (other than for Straddle Period Tax returns), shall
be prepared by Seller and furnished, along with payment of any Tax liability
due, to any Company for approval (which approval shall not be unreasonably
withheld) and signature at least 30 days prior to the due date for filing such
returns.
(iv) In the case of any taxable period that includes (but does not
end on) the Closing Date (each a "Straddle Period"):
(A) real, personal and intangible property Taxes ("Property
Taxes")of any Company attributable to the Pre-Closing Tax Period shall be
equal to the
-46-
amount of such Property Taxes for the entire Straddle Period multiplied by
a fraction, the numerator of which is the number of days during the
Straddle Period that are in the Pre-Closing Tax Period and the denominator
of which is the number of days in the Straddle Period;
(B) The West Virginia Severance Tax ("Severance Tax") of any
Company attributable to the Pre-Closing Tax Period shall be computed as if
such taxable period ended as of the close of business on the Closing Date
including all Severance Tax on the sale of inventory as a result of this
transaction and the STC Credits attributable to the Pre-Closing Tax Period
shall be equal to the amount of such STC Credits for the entire Straddle
Period, multiplied by a fraction, the numerator of which is the number of
days during the Straddle Period that are in the Pre-Closing Tax Period and
the denominator of which is the number of days in the Straddle Period; and
(C) the Taxes of any Company (other than Property Taxes and
Severance Tax) attributable to the Pre-Closing Tax Period shall be computed
as if such taxable period ended as of the close of business on the Closing
Date.
Seller's indemnity obligation in respect of Taxes for a Straddle Period shall
initially be effected by its payment to Buyer of the excess of (x) such Taxes
for the Pre-Closing Tax Period over (y) the amount of such Taxes paid by Seller
or any of its affiliates (other than any Company) at any time plus the amount of
such Taxes paid by any Company on or prior to the Closing Date. Seller shall
initially pay such excess to Buyer within five days prior to the due date of any
return, report or form with respect to Straddle Period Taxes. If the amount of
such Taxes paid by Seller or any of its affiliates (other than any Company) at
any time plus the amount of such Taxes paid by any Company on or prior to the
Closing Date exceeds the amount payable by Seller pursuant to the preceding
sentence, Buyer shall pay to Seller the amount of such excess (a) in the case of
Property Taxes, at the Closing
-47-
(the "Closing Tax Adjustment Amount") and (b) in all other cases, within five
days prior to the due date of the return, report or form with respect to the
final liability for such Taxes is required to be filed. The payments to be made
pursuant to this paragraph by Seller or Buyer with respect to a Straddle Period
shall be appropriately adjusted to reflect any final determination (which shall
include the execution of Form 870-AD or successor form) with respect to Straddle
Period Taxes.
(b) Other Indemnification by Seller. Seller shall indemnify Buyer,
-------------------------------
its affiliates (including each Company) and each of their respective officers,
directors, employees and agents and hold them harmless from any loss, liability,
claim, damage or expense (including reasonable legal fees and expenses) suffered
or incurred by any such indemnified party (other than any relating to Taxes and
STC, for which indemnification provisions are set forth in paragraph (a), (g)
and (h) of this Section 9) to the extent arising from (i) any breach of any
representation or warranty of Seller contained in this Agreement or in any
Schedule, certificate, instrument or other document delivered by it pursuant
hereto (ii) any breach of any covenant of Seller contained in this Agreement
requiring performance after the Closing Date or (iii) any Excluded Liabilities.
Seller's obligation to indemnify Buyer under this Section 9(b) shall be subject
to the following:
(A) Subject to the limitations specified in Section 9(i) hereof, there
shall be no other limitation on the amount of liability for breach of
representations contained in Sections 4(a), (b), (c), (d), (e), (g) and (s);
(B) There shall be no limitation on the amount of liability for
obligations of any Company which by the express terms of this Agreement are not
to be obligations of any Company as of the Closing but instead are to be
distributed out of the Company by not later than the Closing or are to be
retained by Seller specifically including the Excluded Liabilities;
-48-
(C) For all other obligations to indemnify, Seller shall be
responsible as follows:
(w) For losses exceeding $250,000.00 if notice of a claim for
indemnification is received by Seller before the first anniversary of the
closing;
(x) For losses exceeding $500,000.00 if notice of a claim for
indemnification is received by Seller during the period between the first and
second anniversary of the closing;
(y)_ For losses exceeding $1,000,000.00 if notice of a claim for
indemnification is received by Seller during the period between the second and
third anniversary of the closing; and
(z) For losses exceeding $5,000,000.00 if notice of a claim for
indemnification is received by Seller during the period between the third and
fourth anniversary of the Closing.
(D) Notice of any claim for indemnification shall be in writing and
shall state with specificity the nature and circumstances giving rise to such
claim and the amount thereof. Claims for indemnification shall not be
accumulated from year to year for purposes of annual thresholds.
(c) Indemnification by Buyer. Buyer shall indemnify Seller, its
------------------------
affiliates, and each of their respective officers, directors, employees and
agents and hold them harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) suffered or incurred by any such
indemnified party to the extent arising from (i) any breach of any
representation or warranty of Buyer contained in this Agreement or in any
Schedule, certificate, instrument or other document delivered by it pursuant
hereto, (ii) any breach of any covenant of Buyer contained in this Agreement
requiring performance after the Closing Date, (iii) any breach of the covenant
of Buyer contained in this Agreement obligating Buyer to immediately notify
Seller of any
-49-
planned or intended closing of employment sites or layoff of employees,
involving any Company's employment sites or employees existing immediately prior
to the Closing, where such closing or layoff may or will be sufficient to invoke
coverage of the Worker Adjustment and Retraining Notification Act of 1989 for
such Company or (iv) any liabilities or obligations of any Company arising from
events which occur after the Closing Date except any Excluded Liabilities. With
respect to Buyer's obligation to indemnify under this Section 9(c), Buyer shall
be subject to the following:
(A) There shall be no limitation on the amount of liability for
breach of representations contained in Section 6(a)-(d) and (f).
(B) For all other obligations to indemnify, Buyer shall be
responsible as follows:
(w) For losses exceeding $250,000.00 if notice of a claim for
indemnification is received by Buyer before the first anniversary of the
Closing;
(x) For losses exceeding $500,000.00 if notice of a claim for
indemnification is received by Buyer during the period between the first and
second anniversary of the Closing;
(y) For losses exceeding $1,000,000.00 if notice of a claim for
indemnification is received by Buyer during the period between the second and
third anniversary of the Closing; and
(z) For losses exceeding $5,000,000.00 if notice of a claim for
indemnification is received by buyer during the period between the third and
fourth anniversary of the Closing.
(C) Notice of any claim for indemnification shall be in writing and
shall state with specificity the nature and circumstances giving rise to such
claim and the amount thereof. Claims for indemnification shall not be
-50-
accumulated form year to year for purposes of annual thresholds.
(D) Losses Net of Insurance, etc. The amount of any loss, liability,
----------------------------
claim, damage, expense or Tax for which indemnification is provided under this
Section 9 shall be net of any amounts recovered or recoverable by the
indemnified party under insurance policies with respect to such loss, liability,
claim, damage, expense or Tax and shall be (i) increased to take account of any
net Tax cost incurred by the indemnified party arising from the receipt of
indemnity payments hereunder (grossed up for such increase) and (ii) reduced to
take account of any net Tax benefit available to and/or realized by the
indemnified party arising from the incurrence or payment of any such loss,
liability, claim, damage, expense or Tax. In computing the amount of any such
Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all
other items of income, gain, loss, deduction or credit before any item arising
from the receipt of any indemnity recognizing payment hereunder or the
incurrence or payment of any indemnified loss, liability, claim, damage, expense
or Tax.
(E) Termination of Indemnification. The obligations to indemnify and
------------------------------
hold harmless a party hereto (i) pursuant to Section 9 (a) shall terminate at
the time the applicable statute of limitations with respect to the Tax liability
in question expires (giving effect to any extension thereof), (ii) pursuant to
Section 9(b)(i) shall terminate when the applicable representation or warranty
terminates pursuant to Section 13, (iii) pursuant to Section 9(h)(i) shall not
terminate, (iv) with respect to any liability of any Company which by the
express terms of this Agreement are not to be obligations of any Company as of
the Closing shall not terminate and (v) pursuant to any other provision to
indemnify and hold harmless hereunder shall terminate at the close of business
four years following the Closing Date; provided, however, that as to clauses (i)
-------- -------
and (ii) above such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the person to be indemnified or
the related party hereto shall have, before the expiration of
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the applicable period, previously made a claim by delivering a notice (stating
in reasonable detail the basis of such claim) to the indemnifying party.
(f) Procedures Relating to Indemnification (Other than Under Section
----------------------------------------------------------------
9(a) and 9(h)). In order for a party (the "indemnified party") to be entitled
- - ---------------
to any indemnification provided for under this Agreement (other than under
Sections 9(a) or (h)) in respect of, arising out of or involving a claim or
demand made by any person, firm, governmental authority or corporation against
the indemnified party (a "Third Party Claim"), such indemnified party must
notify the indemnifying party in writing, and in reasonable detail, of the Third
Party Claim within 10 business days after receipt of such indemnified party of
written notice of the Third Party Claim; provided, however that failure to give
such notification shall not affect the indemnification provided hereunder except
and unless to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure (the indemnifying party shall not be
liable for any expenses incurred during the period in which the indemnified
party failed to give such notice). Thereafter, the indemnified party shall
deliver to the indemnifying party, within five business days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the Third
Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party. Should
the indemnifying party so elect to assume the defense of a Third Party Claim the
indemnifying party will not be liable to the indemnified party for legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the indemnified
party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
-52-
indemnifying party, it being understood that the indemnifying party shall
control such defense. The indemnifying party shall be liable for fees and
expenses of counsel employed by the indemnified party for any period during
which the indemnifying party has not assumed the defense thereof (other than
during any period in which the indemnified party shall have failed to give
notice of the Third Party Claim as provided above). If the indemnifying party
chooses to defend or prosecute any Third Party Claim, all of the parties hereto
shall cooperate in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient and reasonable basis to provide additional information and
explanation of any material provided hereunder. Whether or not the indemnifying
party shall have assumed the defense of a Third Party Claim, the indemnified
party shall not admit any liability with respect to , or settle, compromise or
discharge, such Third Party Claim without the indemnifying party's prior written
consent (which consent shall not be unreasonably withheld).
(g) Procedures Relating to Indemnification of Tax Claims. If either
Seller or Buyer receives a written claim from any taxing authority that, if
successful, would result in an indemnity payment to Buyer, Seller or one of
their respective affiliates (a "Tax Claim"), the party receiving such Tax Claim
shall promptly notify the other party in writing of such Tax Claim.
With respect to any Tax Claim (other than those relating solely to
Taxes of any Company for a Straddle Period), the indemnifying party shall
control all proceedings taken in connection with such Tax Claim (including,
without limitation, selection of counsel) and, without limiting the foregoing,
may in its sole discretion forgo any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with respect
thereto, and may, in its sole discretion, either pay the Tax claimed and sue for
a refund where applicable
-53-
law permits such refund suits or contest such Tax Claim in any permissible
manner. The indemnifying party shall, however, consider in good faith the advice
of the other party concerning the most appropriate forum in which to proceed and
other related matters (it being understood, however, that all such decisions
shall be left to the sole discretion of indemnifying party); provided, however,
-------- --------
that in no case shall the indemnifying party settle or otherwise compromise any
Tax Claim without the other party's prior written consent, which consent shall
not be unreasonably withheld. Buyer shall control all proceedings taken in
connection with any Tax Claim relating solely to Taxes of any Company for a
Straddle Period. Buyer, Seller, any Company and each of their respective
affiliates shall cooperate with each other in contesting any Tax Claim, which
cooperation shall include, without limitation, the retention and (upon request)
the provision of records and information to the other party that are reasonably
relevant to such Tax Claim.
(h) STC Indemnification and Procedures Relating Thereto, (i) Seller
---------------------------------------------------
shall indemnify Buyer, its affiliates (including the Companies) and each of
their respective officers, directors, employees and agents and hold them
harmless from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) suffered or incurred by any such indemnified
party (other than any loss, liability, claim, damage or expense relating to the
indemnification set forth in paragraphs (a) and (b) of this Section 9) arising
from any assessment by the West Virginia Department of Tax and Revenue, made
against Appalachian Mining, Inc. or Vandalia Resources, Inc. for credits, if
any, taken by Appalachian Mining, Inc. or Vandalia Resources, Inc. while either
was affiliated with Seller prior to Closing. Seller shall pay to Buyer such
amount claimed pursuant to paragraph (h) (iii) of this Section 9 within five
days of the receipt of such claim.
(ii) Buyer shall indemnify Seller, its affiliates and each of their
respective officers, directors, employees and agents and hold them harmless from
any loss, liability, claim, damage or expense
-54-
(including reasonable legal fees and expenses) suffered or incurred by any such
indemnified party arising from any assessment by the West Virginia Department of
Tax and Revenue to the extent such assessment reduces STC claimed for periods
prior to the Closing Date and was caused by actions taken by Buyer after the
Closing Date. Buyer shall pay to Seller such amount claimed pursuant to
paragraph (h) (iii) of this Section 9 within five days of receipt of such claim.
(iii) If either Seller or Buyer receives a written claim from any
taxing authority that, if successful, would result in an indemnity payment to an
indemnified party or one of its affiliates pursuant to paragraph (h) (i) or (ii)
of this Section 9 (a "STC Claim"), the party receiving such STC Claim shall
promptly notify the other party in writing of such STC Claim. With respect to
any STC Claim, the procedure set forth in paragraph (g) shall be applicable.
(i) The aggregate liability of Seller under this Section 9 shall
not exceed the Purchase Price. The sole and exclusive remedy of Buyer for
damages exceeding such amount shall be a right of rescission.
(j) In no event shall either Buyer or Seller or any of their
respective affiliates, directors, officers, agents or attorneys be liable for
any indirect, special extraordinary or consequential damages under this
Agreement or with respect to the transactions contemplated hereunder or in the
agreements attached as Exhibits hereto unless specifically and expressly
permitted by the terms and provisions thereof.
10. Tax Matters. (a) Buyer shall (i) timely make an election under
-----------
Section 338(g) of the Code (and any comparable election under state or local Tax
law) with respect to each Company, (ii) join Seller in timely making an election
under Section 338(h)(10) of the Code (and any comparable election under state or
local Tax law) with respect thereto and (iii) cooperate with Seller in the
completion and timely filing of such elections in accordance with the provisions
of Temporary Regulation
-55-
(S)1.338(h)(10)-1T (or any comparable provisions of state or local Tax law) or
any successor provision. By not later than seven days after the date hereof,
Seller and Buyer shall negotiate in good faith an agreement to allocate the sum
of (i) Purchase Price and (ii) the liabilities (other than the Excluded
Liabilities) of the Companies within the meaning of Temporary Regulations
(S)1.338(b)-1T(f)(1) immediately after the Closing Date (hereinafter
collectively referred to as the "Adjusted Purchase Price"), and such allocation
shall be set forth on Schedule 10(a) to be attached hereto. Neither Seller nor
Buyer (nor any of their respective affiliates) shall take any position on any
Tax return or with any taxing authority that is inconvenient with the Adjusted
Purchase Price allocation set forth on Schedule 10(a).
(b) For any Straddle Period, Buyer shall timely prepare and file with
the appropriate authorities all Tax returns, reports and forms required to be
filed and will pay all Taxes due with respect to such returns, reports and
forms; provided that Seller will reimburse Buyer (in accordance with the
--------
procedures set forth in Section 9(a)) for any amount owed by Seller pursuant to
Section 9(a) with respect to the taxable periods covered by such returns,
reports or forms. For any taxable period of any Company that ends on or before
the Closing Date, other than for returns, reports and forms which have been
previously filed, Seller shall timely prepare and furnish to such Company for
approval all Tax returns due with respect to such returns, reports and forms in
accordance with the provisions of Section 9(a). Buyer and Seller agree to cause
each Company to file all Tax returns, reports and forms for the period including
the Closing Date on the basis that the relevant taxable period ended as of the
close of business on the Closing Date, unless the relevant taxing authority will
not accept a return, report or form filed on that basis.
(c) Seller, each Company and Buyer shall reasonably cooperate, and
shall cause their respective affiliates, officers, employees, agents, auditors
and representatives reasonably to cooperate, in preparing and filing all
returns, reports and forms relating to Taxes,
-56-
including maintaining and making available to each other all records necessary
in connection with Taxes and in resolving all disputes and audits with respect
to all taxable periods relating to Taxes. Buyer and Seller recognize that each
party and their respective affiliates will need access, from time to time, after
the Closing Date, to certain accounting and Tax records and information held by
any COMPANY or Seller to the extent such records and information pertain to
events occurring prior to the Closing Date; therefore, Buyer, Seller and their
respective affiliates agree, and Buyer agrees to cause each Company, (i) to use
its reasonable efforts to properly retain and maintain such records until such
time as the other party agrees that such retention and maintenance is no longer
necessary, and (ii) to allow Seller, Buyer and their respective agents and
representatives (and agents or representatives of any of their affiliates), at
times and dates mutually acceptable to the parties, to inspect, review and make
copies of such records as such party may deem necessary or appropriate from time
to time, such activities to be conducted during normal business hours and at the
expense of the party requesting such copies.
(d) Any refunds or credits of Taxes of any Company for any taxable
period ending on or before the Closing Date shall be for the account of Seller
except to the extent any such refund is reflected on the Working Capital
Statement, in which case such refund shall be for the account of Buyer. Any
refunds or credits of Taxes of any Company for any taxable period beginning
after the Closing Date shall be for the account of the Buyer. Any refunds or
credits of Taxes of any Company for any Straddle Period shall be apportioned
between Seller and Buyer in accordance with the formula in Section 9(a) as it
relates to a Straddle Period. Buyer shall, if Seller so requests and at
Seller's expense and if Buyer obtains, at Seller's expense, an opinion from
outside tax counsel that such action does not cause Buyer harm, cause any
Company to file for and obtain any refunds or credits to which Seller is
entitled under this Section 10(d). Buyer and Seller shall jointly control the
presentation of any such refund claim made on behalf of Seller. Buyer shall
cause
-57-
each COMPANY to forward to Seller any such refund due to Seller within 10
days after the refund is received (or reimburse Seller for any such credit
within 10 days after the credit is allowed or applied against other Tax
liability); provided, however, that any such amounts payable to Seller shall be
-------- -------
net of any Tax cost to Buyer or such Company, as the case may be, attributable
to the receipt of such refund. Notwithstanding the foregoing, the control of
the prosecution of a claim for refund of Taxes paid pursuant to a deficiency
assessed subsequent to the Closing Date as a result of an audit shall be
governed by the provisions of Section 9(g).
(e) Seller shall be responsible for filing any amended consolidated,
combined or unitary Tax returns, reports or forms for taxable years ending on or
prior to the Closing Date which are required as a result of examination
adjustments made by the Internal Revenue Service or by the applicable state,
local or foreign taxing authorities for such taxable years as finally
determined. For those jurisdictions in which separate Tax returns are filed by
any Company, any required amended returns resulting from such examination
adjustments, as finally determined, shall be prepared by Seller and furnished to
such Company for approval (which approval should not be unreasonably withheld),
signature and filing at least 30 days prior to the due date for filing such
returns.
(f) Seller shall deliver to Buyer at the Closing an affidavit in form
and substance satisfactory to Buyer, duly executed and acknowledged, certifying
that the sale of the Shares is exempt from the provisions of the Foreign
Investment in Real Property Tax Act of 1980.
(g) On the Closing Date, Buyer will cause each COMPANY to conduct its
business in the ordinary course in substantially the same manner as presently
conducted and on the Closing Date will not permit such COMPANY to effect any
extraordinary transactions (other than any such transactions expressly required
by applicable law or by this Agreement) that could result in Tax liability to
such
-58-
Company in excess of Tax liability associated with the conduct of its business
in the ordinary course.
(h) Seller shall cause the provisions of any Tax sharing or allocation
agreement to which any Company is a party to be terminated on or before the
Closing Date, such that such COMPANY shall not have any obligation with respect
to any such agreement after the Closing Date.
(i) Buyer shall pay any stock transfer Taxes due as a result of the
sale of the Shares.
11. Assignment. This Agreement and the rights and obligations
----------
hereunder shall not be assignable or transferable by Buyer or Seller (including
by operation of law in connection with a merger, or sale of substantially all
the assets, of Buyer or Seller) without the prior written consent of the other
party hereto; provided, however, that Buyer may assign its right to purchase the
-------- -------
Shares hereunder to one or more subsidiaries or affiliates of Buyer without the
prior written consent of Seller; overnight courier service, mailed or sent by
telecopy by the sending party, as follows:
(i) If to Buyer:
Pittston Acquisition Company
100 First Stamford Place
Stamford, Connecticut 06912
(Telecopy No.: 203-978-5205)
Attention: President
With copies to:
Pittston Coal Management COMPANY
P.O. Box 5100
Lebanon, Virginia 24266
(Telecopy No.: 703-889-6160)
Attention: General Counsel
-59-
and
Jackson & Kelly
1600 Laidley Tower
P.O. Box 553
Charleston, West Virginia 25322
(Telecopy No.: 304-340-1130)
Attention: Charles Q. Gage, Esq.
and
Latham & Watkins
Suite 1000, 885 Third Avenue
New York, New York 10022-4802
(Telecopy No.: 212-751-4864)
Attention: Jeffrey J. Hass
(ii) If to Seller:
In care of Addington Resources, Inc.
9431 U.S. Route 60
Ashland, Kentucky 41102
(Telecopy No.: 606-928-9527)
Attention: R. Douglas Striebel,
Chief Financial Officer
With copies to:
Michael D. Johnson, Esq.
1932 Carter Avenue
P.O. Box 1545
Ashland, Kentucky 41105-1545
(Telecopy No.: 606-325-1690)
and
Paul E. Sullivan, Esq.
Brown, Todd & Heyburn
2700 Lexington Financial Center
Lexington, Kentucky 40507
(Telecopy No.: 606-231-0011)
-60-
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telecopy, or on the date five business days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 17 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 17.
18. Interpretation. The headings contained in this Agreement, in any
--------------
Exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Waiver. Whenever in this Agreement a party is permitted to waive
------
a condition, right or obligation of the other party, such waiver to be effective
must be in writing and signed by the waiving party with notice in accordance
with this Agreement.
20. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
21. Entire Agreement. This Agreement, including the Exhibits and
----------------
Schedules attached hereto, constitutes the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
22. Fees. (a) Each party to this Agreement shall pay all expenses
----
incurred by it or on its behalf in connection with the preparation,
authorization, execution and performance of this Agreement, including, but not
limited to, all fees and expenses of agents, representatives, counsel and
accountants.
-61-
(b) Each party to this Agreement shall hold the other party harmless
with respect to any broker's, finder's or other similar agent's fee with respect
to the transactions contemplated hereby claimed by any broker, finder or similar
agent engaged or employed by the indemnifying party.
23. Severability. If any provision of this Agreement or the
------------
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
24. Consent to Jurisdiction. Each of Buyer and Seller irrevocably
-----------------------
submits to the exclusive jurisdiction of (a) the Circuit Court of Boyd County,
Kentucky, and (b) the United States District Court for the Eastern District of
Kentucky, for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby. Each of Buyer and
Seller agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Eastern District of Kentucky or, if,
for jurisdictional reasons, such suit, action or other proceeding may not be
brought in such court, in the Circuit Court of Boyd County, Kentucky. Each of
Buyer and Seller further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in Kentucky with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. Each of
Buyer and Seller irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (a) the Circuit Court of Boyd County,
Kentucky, or (b) the United States District Court for the Eastern District of
Kentucky, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any
-62-
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
25. Non-solicitation of Personnel. Except for the employees whose
-----------------------------
names are set forth on Schedule 24 or otherwise agreed to by Seller and Buyer in
writing, Seller hereby agrees that for a period of one year following the
Closing Date neither it nor any person affiliated with it will, directly or
indirectly, solicit or recruit any employee of any Company or any employee of
Buyer or its affiliates previously employed by any Company or otherwise request
or cause any such employee to terminate his or her employment with any Company
or Buyer or its affiliates. Seller acknowledges that the covenant contained in
this Section is reasonable and necessary to protect the legitimate business
interests of Buyer. Notwithstanding the above, Seller shall not be prohibited
from employing individuals who are not on Schedule 24 who without solicitation
by Seller terminate employment with the Companies and seek employment with
Seller or its affiliates.
26. Other Agreement. At Closing, Seller shall cause the Agreement
---------------
substantially in the form attached hereto as Exhibit K to be excluded by the
parties thereto (other than Buyer) and delivered to Buyer.
27. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the Commonwealth of Kentucky.
28. Affiliate Defined. As used in this Agreement, the term
-----------------
"affiliate" shall mean any person or entity that directly or indirectly
controls, is controlled by or is under common control with, any other person or
entity.
29. Termination.
-----------
(a) If a condition to Buyer's obligation to close in Section 3(a) is
not satisfied on or before December 31, 1993, then Buyer shall have the right to
either waive the condition and acquire the Shares or terminate the parties
-63-
obligation to close the sale of the Shares under this Agreement. If Buyer
elects to acquire the Shares, then Buyer shall not seek indemnification from
Seller with respect to the event or facts giving rise to the failure of the
condition. If Buyer elects to terminate the parties' obligations to consummate
the transactions contemplated by this Agreement by reason of such failure, then
neither party shall have any liability to the other party in connection with the
failure to close, subject however to the provisions of Section 5A(e).
(b) If a condition to Seller's obligation to close in Section 3(b) is
not satisfied on or before December 31, 1993, then Seller shall have the right
to either waive the condition and sell the Shares or terminate the parties
obligation to close the sale of the Shares under this Agreement. If Seller
elects to sell the Shares, then Seller shall not seek indemnification from Buyer
with respect to the event or facts giving rise to the failure of the condition.
If Seller elects to terminate the parties' obligations to consummate the
transactions contemplated by this Agreement by reason of such failure, then
neither party shall have any liability to the other party in connection with the
failure to close.
30. Publicity. Through the Closing, neither Seller nor Buyer shall
---------
issue any public announcement regarding the terms of this Agreement or the
transactions contemplated hereby without the prior consent of the other party,
unless required by law in which event each party shall provide the other party
with prior opportunity to comment on any such public announcement.
31. Trade Secrets. Except as expressly provided to the contrary in
-------------
this Agreement or the Exhibits attached hereto, Seller and its affiliates shall
have the right to use any confidential or trade secrets information of the
Companies acquired through Seller's ownership of the Companies in connection
with Seller's and its affiliates activities after Closing.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
ADDINGTON HOLDING COMPANY, INC.
By:/s/ Larry Addington
-----------------------------
Name: Larry Addington
Title: President
PITTSTON ACQUISITION COMPANY
By:/s/ Garold R. Spindler
-----------------------------
Name: Garold R. Spindler
Title: Vice President
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