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Exhibit 2.8
Execution Copy
CONTRIBUTION AGREEMENT
AMONG
ANR FUND IX HOLDINGS, L.P.,
ALPHA NATURAL RESOURCES, INC.,
VOLLOW RESOURCES, LLC, REDBANK, INC.,
DEERFIELD RESOURCES, INC., RIVERSIDE ENERGY, INC.,
STILL RUN COAL COMPANY, INC., ALPINE DEVELOPMENT COMPANY,
CREEKSIDE ENERGY
DEVELOPMENT COMPANY, VIRGINIA CREWS COAL COMPANY, INC.,
HERNDON PROCESSING COMPANY, KEPLER PROCESSING COMPANY,
NEWHALL POCAHONTAS ENERGY, LLC, METCOAL SALES, INC.,
CONSULTING AND COAL SERVICES, INC., AMCI EXPORT CORPORATION,
SENATE COAL MINES, INC., AMCI ENERGY, LLC,
AMERICAN METALLURGICAL
COAL SALES, LLC, LAUREL MOUNTAIN MANAGEMENT, INC.
TANOMA
ENERGY, INC., I-22 PROCESSING, INC.,
DUNAMIS RESOURCES, INC., MADISON MINING COMPANY, LLC,
LAUREL ENERGY, L.P., LAUREL RESOURCES, L.P.,
RRD, INC., SOLOMONS GROUP, INC., BETA RESOURCES, LLC
K-M INVESTMENT CORP.,
THE ADDITIONAL PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
AND
ANR HOLDINGS, LLC
DATED AS OF
DECEMBER 31, 2002
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TABLE OF CONTENTS
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ARTICLE I -
DEFINITIONS...........................................................................................
3
ARTICLE II -
CONTRIBUTION.........................................................................................
21
2.1 FRC Capital
Contribution...........................................................................
21
2.2 AMCI Capital
Contribution..........................................................................
21
2.3 Assumed
Liabilities................................................................................
21
2.4 Retained
Assets and Retained
Liabilities...........................................................
21
2.5 Attempted
Assignment of Contributed Interests and Assumed
Liabilities.............................. 22
2.6 Proration of
Liabilities...........................................................................
22
2.7
Closing............................................................................................
23
2.8 Closing Date
Inventory
Adjustment..................................................................
25
ARTICLE III - REPRESENTATIONS AND
WARRANTIES OF THE AMCI PARTIES REGARDING THE
TRANSACTION........................ 27
3.1 Organization
of the AMCI Entities and the Asset Contribution
Companies............................. 27
3.2
Authorization of
Transaction.......................................................................
27
3.3
Noncontravention...................................................................................
28
3.4 Brokers'
Fees......................................................................................
28
3.5
Investment.........................................................................................
28
3.6 Ownership of
Equity
Interests......................................................................
28
3.7 FRC Parties'
Breach of Representation or
Warranty..................................................
29
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF THE FRC ENTITIES REGARDING THE
TRANSACTION......................... 29
4.1 Organization
of the FRC
Parties....................................................................
29
4.2
Authorization of
Transaction.......................................................................
30
4.3
Noncontravention...................................................................................
30
4.4 Brokers'
Fees......................................................................................
31
4.5
Investment.........................................................................................
31
4.6 AMCI
Parties' Breach of Representation or
Warranty.................................................
31
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF THE AMCI PARTIES REGARDING THE CONTRIBUTED
INTERESTS................ 31
5.1
Incorporation......................................................................................
32
5.2
Noncontravention...................................................................................
32
5.3 Absence of
Changes.................................................................................
32
5.4 Financial
Statements...............................................................................
34
5.5 Real
Property......................................................................................
34
5.6 Title of
Assets other than Real
Property...........................................................
35
5.7 Intellectual
Property..............................................................................
36
5.8 Permits and
Environmental
Compliance...............................................................
36
5.9 Reclamation
Bonds..................................................................................
38
5.10
Contracts..........................................................................................
39
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5.11 Litigation;
Claims.................................................................................
39
5.12. Employee
Benefits..................................................................................
40
5.13
Taxes..............................................................................................
42
5.14 Employment
Matters.................................................................................
44
5.15 No
Broker..........................................................................................
45
5.16 Health and Safety
Requirements.....................................................................
45
5.17 Restrictions on
Business
Activities................................................................
45
5.18 Powers of
Attorney.................................................................................
45
5.19 Transactions With
Affiliates.......................................................................
45
5.20 Absence of
Certain
Payments........................................................................
45
5.21
Insurance..........................................................................................
45
5.22 Undisclosed
Liabilities............................................................................
46
ARTICLE VI - COVENANTS OF THE
PARTIES.............................................................................
46
6.1 Operation in
Ordinary
Course.......................................................................
46
6.2 Compliance
with
Law................................................................................
46
6.3
Cooperation........................................................................................
46
6.4 Notices and
Consents...............................................................................
47
6.5
Publicity..........................................................................................
47
6.6 Permits;
Replacement Bonds; Insurance and Guarantees; Other
Filings................................ 47
6.7
Exclusivity........................................................................................
49
6.8
Access.............................................................................................
49
6.9 Notice of
Developments.............................................................................
49
6.10 Further
Assurances.................................................................................
51
6.11 Cooperation on
Financial
Information...............................................................
51
6.12 Termination/Assumption of Benefit
Plans............................................................
53
6.13 Mergers Prior to
Closing...........................................................................
53
6.14 Retained
Debt......................................................................................
53
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ARTICLE VII - CONDITIONS
PRECEDENT................................................................................
54
7.1 Conditions
Precedent to Each Party's
Obligations...................................................
54
7.2 Conditions
Precedent to Obligations of the FRC
Parties............................................. 55
7.3 Conditions
Precedent to Obligations of the AMCI
Parties............................................ 56
ARTICLE VIII - REMEDIES FOR BREACHES OF
AGREEMENT.................................................................
57
8.1 Survival of
Representations, Warranties and Certain
Covenants...................................... 57
8.2
Indemnification Provisions for Benefit of the FRC
Parties.......................................... 58
8.3
Indemnification Provisions for Benefit of the AMCI
Parties......................................... 62
8.4 Matters
Involving Third
Parties....................................................................
64
8.5
Determination of Amount of Adverse
Consequences....................................................
65
8.6 Tax
Treatment of Indemnity
Payments................................................................
66
8.7 Subrogation
and Insurance
Proceeds.................................................................
66
8.8 Settlement
of Indemnity Obligation with Membership
Interests....................................... 66
ARTICLE IX - CERTAIN TAX
MATTERS..................................................................................
66
9.1 Post-Closing
Tax
Returns...........................................................................
66
9.2 Pre-Closing
Tax
Returns............................................................................
66
9.3 Straddle
Periods...................................................................................
67
9.4 Straddle
Returns...................................................................................
67
9.5 Claims for
Refund..................................................................................
68
9.6 Cooperation
on Tax
Matters.........................................................................
68
9.7 Certain
Taxes......................................................................................
68
9.8
Confidentiality....................................................................................
69
9.9
Audits.............................................................................................
69
9.10 Control of
Proceedings.............................................................................
69
9.11 Powers of
Attorney.................................................................................
69
9.12 Remittance of
Refunds..............................................................................
70
9.13
Allocation.........................................................................................
70
9.14 Closing Tax
Certificate............................................................................
70
9.15. Property
Taxes.....................................................................................
70
9.16. Transfer
Taxes.....................................................................................
71
ARTICLE X - COVENANTS REGARDING
EMPLOYEES.........................................................................
71
10.1.
Employees..........................................................................................
71
10.2. Collective Bargaining
Obligations..................................................................
72
10.3. Participation in the UMWA Pension
Plans............................................................
72
ARTICLE XI -
TERMINATION..........................................................................................
73
11.1.
Termination........................................................................................
73
11.2. Effect of
Termination..............................................................................
74
ARTICLE XII -
MISCELLANEOUS.......................................................................................
74
12.1 Entire
Agreement...................................................................................
74
12.2
Amendment..........................................................................................
74
12.3 Extension;
Waiver..................................................................................
74
12.4
Expenses...........................................................................................
74
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12.5 Bulk Sales
Waiver..................................................................................
75
12.6 Governing
Law......................................................................................
75
12.7
Assignment.........................................................................................
75
12.8
Notices............................................................................................
75
12.9 Counterparts;
Headings.............................................................................
77
12.10 Interpretation;
Construction.......................................................................
77
12.11
Severability.......................................................................................
77
12.12 No Reliance or Third Party
Beneficiaries...........................................................
77
12.13 Retention of and Access to
Records.................................................................
77
12.14
Arbitration........................................................................................
78
12.15 Attorneys'
Fees....................................................................................
78
12.16 Right to Specific
Performance......................................................................
78
12.17 Further
Actions....................................................................................
78
12.18
Time...............................................................................................
78
12.19 Punitive
Damages...................................................................................
78
12.20 AMCI
Representative................................................................................
78
12.21 No Other
Representations...........................................................................
79
12.22 Disclosure
Schedules...............................................................................
80
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EXHIBITS
Exhibit A
Company Agreement
Exhibit B
AMCI Parties Closing Certificate
Exhibit C
Company Employment Agreement
Exhibit D
FRC Parties Closing Certificate
Exhibit E
Subscription
Agreement
Exhibit F
Cooperation Agreement
Exhibit G
Administrative Services Agreement
Exhibit H
Member Agreement
Exhibit I
Financial Statements
Exhibit J
Proposed Financing Terms
Exhibit K
Opinion of Counsel to the AMCI Parties
Exhibit L
Opinion of Counsel to the FRC Parties
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LIST OF SCHEDULES
AMCI DISCLOSURE SCHEDULES
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Section 1.1(a)(i)
Owned Equipment
Section 1.1(a)(ii)
Leased Equipment
Section 1.1(b)(i)
Persons with Knowledge AMCI
Section 1.1(c)
Hazardous Substances
Section 1.1(d)
Non-Signatory Companies
Section 1.1(e)
Parts, Fuel and Supplies Inventory
Section 1.1(f)
Permits
Section 1.1(g)
Permitted Encumbrances
Section 1.1(h)(i)
Owned Real Property
Section 1.1(h)(ii)
Leased Real Property
Section 1.1(i)
Retained Assets
Section 1.1(j)
Claims, Legal Actions, Suits, Litigation, Arbitrations,
Grievances, Disputes or Investigations
Section 1.1(k)
Debts for Borrowed Money
Section 1.1(l)
Signatory Companies
Section 1.1(m)
Working Capital Adjustment Rules
Section 2.6
AMCI Receivables and Payables
Section 3.2
Governmental Notices and Approvals
Section 3.6
Record and Beneficial Ownership of the AMCI Entities
Section 5.2
Consents to Material Contracts
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Section 5.5(a)
Owned Material Real Property
Section 5.5(b)
Leased Material Real Property
Section 5.5(f)
Consents to Assignment of Leases
Section 5.8
Phase 1 Environmental Reports
Section 5.8(d)
Citations, Notices of Violations and Notices of Non-Compliance
Section 5.9
Bonds, Guarantees, Indemnities, Letters of Credit
Section 5.10
Material Contracts
Section 5.11(a)
Legal Actions Involving More Than $100,000
Section 5.12(a)
Employee Benefit Plans
Section 5.13
Federal, State, Local, and Foreign Income Tax Returns
Section 5.13(g)
Certain Tax Matters
Section 5.13(j)
Material Tax Elections
Section 5.14(b)
Panels of UMWA Employees
Section 5.14(c)
Coal Act assigned
employees
Section 5.21
Material Insurance Policies
Section 6.4(a)
Consents of the AMCI Parties
Section 6.4(b)
Consents of the Company
Section 6.6
Financial
Commitments, Guarantees and Collateral Agreements Company Prior
to the Closing Date
Section 7.1(d)(i)
Consents Required from AMCI Parties as a Closing Condition
Section 7.1(d)(ii)
Consents Required from FRC Parties as a Closing Condition
Section 8.2(b)(x)
Certain Receivables
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FRC DISCLOSURE SCHEDULES
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Section 1.1(b)(ii)
Persons with Knowledge FRC
Section 4.2
Consents to Material Contracts
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OTHER SCHEDULES
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Schedule 2.2
Contributions and Related Information
Schedule 2.3
Assumed Liabilities
Schedule 2.8(b)
Inventory Measurement
Schedule 6.14
Additional Deeds of Trust to be Terminated at or Prior Closing
Schedule 9.13
Estimated Allocation
Schedule 10.1
Asset Contribution Companies Terminating Employment
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Exhibit 2.8
Execution Copy
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement" or this
"Contribution Agreement") is made as of
December 31, 2002, among (i) ANR Fund IX
Holdings, L.P., a Delaware limited
partnership, and Alpha Natural Resources,
Inc., a Delaware corporation (together, the
"FRC Parties"), (ii) Vollow
Resources, LLC, a West Virginia limited
liability company ("Vollow"), Redbank,
Inc., a West Virginia corporation
("Redbank"), Deerfield Resources, Inc., a West
Virginia corporation ("Deerfield"),
Riverside Energy, Inc., a West Virginia
corporation ("Riverside"), Still Run Coal
Company, Inc., a West Virginia
corporation ("Still Run"), Alpine
Development Company, a West Virginia
corporation ("Alpine"), Creekside Energy
Development Company, a West Virginia
corporation ("Creekside"), Virginia Crews
Coal Company, Inc., a West Virginia
corporation ("Virginia Crews"), Herndon
Processing Company, a West Virginia
corporation ("Herndon"), Kepler Processing
Company, a West Virginia corporation
("Kepler"), Newhall Pocahontas Energy, LLC,
a West Virginia limited liability
company ("Newhall Pocahontas"), Metcoal
Sales, Inc., a West Virginia corporation
("Metcoal"), Consulting and Coal Services,
Inc., a West Virginia corporation
("CCSI"), AMCI Export Corporation, a
Delaware corporation ("AMCI Export"),
Senate Coal Mines, Inc., a Pennsylvania
corporation ("Senate Coal"), AMCI
Energy, LLC, a Virginia limited liability
company ("AMCI Energy"), American
Metallurgical Coal Sales, LLC, a North
Carolina limited liability company
("AMCS"), Laurel Mountain Management, Inc.,
a Pennsylvania corporation ("LMM"),
Tanoma Energy, Inc., a Pennsylvania
corporation ("Tanoma Energy"), I-22
Processing, Inc., a Pennsylvania
corporation ("I-22"), Dunamis Resources, Inc.,
a Pennsylvania corporation ("Dunamis"),
Madison Mining Company, LLC, a
Pennsylvania limited liability company
("Madison"), Laurel Energy, L.P., a
Pennsylvania limited partnership ("Laurel
Energy"), Laurel Resources, L.P., a
Pennsylvania limited partnership ("Laurel
Resources"), RRD, Inc., a West
Virginia corporation ("RRD"), Solomons
Group, Inc., a Pennsylvania corporation
("Solomons Group"), Beta Resources, LLC, a
Colorado limited liability company
("Beta")(collectively, the "AMCI
Entities"), K-M Investment Corp., a Delaware
corporation ("KM" or the "Principal
Shareholder"), and the additional Persons
listed on the signature pages of this
Agreement (the "Other Shareholders," and
together with the AMCI Entities and the
Principal Shareholder, the "AMCI
Parties")), and (iii) ANR Holdings, LLC, a
Delaware limited liability company
(the "Company"). Together, the FRC Parties,
the AMCI Parties, and the Company
shall be referred to in this Agreement as
(the "Parties"). Capitalized terms not
otherwise defined in this Agreement have
the meaning given such terms in Article
I.
RECITALS
WHEREAS, the AMCI Entities engage directly or through various
entities that they own or control in (i)
the mining, processing and sale of coal
produced by them in the States of West
Virginia and Colorado and the
Commonwealths of Pennsylvania and Kentucky,
(ii) the operation of bulk materials
handling and coal processing facilities,
(iii) the domestic trading of coal,
including the
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purchase and resale of coal produced by
others and (iv) the operation of an
ocean going port in Nova Scotia, Canada
through the Contributed Companies or
with the Contributed Assets (collectively,
the "Business");
WHEREAS, the AMCI Parties and the FRC Parties desire to make
certain contributions to the Company, and
to enter into the Amended and Restated
ANR Holdings, LLC Company Agreement
attached as Exhibit A (together with the
exhibits thereto, the "Company Agreement"),
to hold, through subsidiary limited
liability companies, the Contributed
Interests (as defined below) and to engage
in the Business;
WHEREAS, Newhall Processing, Inc., a West Virginia corporation
has been merged into Newhall Pocahontas,
with Newhall Pocahontas being the
surviving entity;
WHEREAS, Solomons Group owns all of the outstanding stock of
Solomons Mining Company, a West Virginia
corporation ("Solomons Mining");
WHEREAS, RRD owns all of the outstanding shares of
Guayndotte-Pocahontas Energy, Inc., a West
Virginia corporation ("Guyandotte")
and Open Fork, Inc., a West Virginia
corporation ("Open Fork");
WHEREAS, Michael J. Quillen ("Quillen"), Ernie L. Thrasher
("Thrasher"), D. Scott Kroh ("Kroh"), Hans
J. Mende ("Mende") and Fritz R.
Kundrun ("Kundrun") each own 20% of the
outstanding membership interest of
Provincial Energy Ventures Limited, LLC
("Provincial");
WHEREAS, Beta owns 55% and NS of Colorado, Inc. ("NS") owns
45% of the outstanding membership interest
of each of National King Coal, LLC, a
Colorado limited liability company ("NKC")
and Gallup Transportation and
Transloading, LLC, a New Mexico limited
liability company ("GTTC");
WHEREAS, the AMCI Parties will cause to be contributed, and
the Company or its Affiliates will acquire,
Guyandotte, Open Fork and Solomons
Mining through the consummation of a merger
with such corporations and all of
such corporations shall be referred to as
the "Contributed Corporations";
WHEREAS, the AMCI Parties will cause to be contributed, and
the Company or its Affiliates will acquire,
GTTC, NKC and Provincial through an
acquisition of the membership interests of,
or consummation of a merger with,
such limited liability companies, and (i)
all of such limited liability
companies shall be referred to as the
"Contributed LLCs" and (ii) the
Contributed Corporations, and the
Contributed LLCs shall be referred to as the
"Contributed Companies";
WHEREAS, the AMCI Parties will cause to be contributed, and
the Company or its Affiliates will acquire,
certain of the assets of Alpine,
AMCI Energy, AMCI Export, AMCS, Creekside,
CCSI, Deerfield, Dunamis, Herndon,
I-22, Kepler, Laurel Energy, Laurel
Resources,
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LMM, Madison, Metcoal, Newhall Pocahontas,
Redbank, Riverside, Senate Coal,
Still Run, Tanoma Energy, Virginia Crews
and Vollow (each, an "Asset
Contribution Company" and collectively, the
"Asset Contribution Companies"), and
(i) all of such assets acquired from the
Asset Contribution Companies shall be
referred to as the "Contributed Assets,"
(ii) the Contributed Assets together
with the Contributed Companies shall be
referred to collectively in this
Agreement as the "Contributed Interests"
and (iii) the Asset Contribution
Companies together with the Contributed
Companies shall be referred to
collectively as the "Subject
Companies";
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the AMCI Parties
desire to contribute the Contributed
Interests to the Company, in return for
which the AMCI Parties shall receive
cash and a 48.921% Membership Interest in
the Company, as set forth in the
Company Agreement;
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the FRC Parties
have made or shall make capital
contributions to the Company, totaling
approximately $78.54 million, in return
for which the FRC Parties shall receive a
50.917% Membership Interest in the
Company as set forth in the Company
Agreement; and
WHEREAS, the AMCI Entities, the Principal Shareholder and the
Other Shareholders are willing to undertake
certain obligations for which they
will receive substantial benefits to induce
the FRC Parties to enter into this
Agreement;
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise expressly provided in this Agreement:
1.1 The following terms, as used in this Agreement, have the
following meanings:
"Active Operating Properties" means all property included in
Permits currently issued to the Subject
Companies prior to the Closing or
property that is necessary or required to
operate the Business in the manner
currently conducted.
"Adverse Consequences" means, without duplication, all
actions, suits, proceedings, hearings,
investigations, charges, complaints,
claims, demands, injunctions, judgments,
orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid
in settlement, Liabilities,
obligations, Taxes, liens, losses,
expenses, and fees, including court costs and
reasonable attorneys' fees and expenses,
but excluding lost profits, punitive,
exemplary, special or consequential damages
(except to the extent any such
remedies are included in the Third Party
Claim by a non-Affiliate of the
Indemnified Party, for which such
Indemnified Party is otherwise entitled to
indemnification under this Agreement).
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"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling,
controlled by or under common control
with such Person; provided that Solomons
Group and Solomons Mining shall be
deemed to be Affiliates of the AMCI
Parties. For purposes of this definition,
the term "controls," "is controlled by," or
"is under common control with" means
the power to direct or cause the direction
of the management and policies of a
person or entity, whether through the
ownership of voting securities, by
contract or otherwise.
"Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a) or any
similar group defined under a similar
provision of state, local or foreign
law.
"AMCI Parties Closing Certificate" means the certificate of
the AMCI Parties substantially in the form
of Exhibit B attached to this
Agreement.
"AMCI Parties Indemnitees" means, collectively, the AMCI
Parties and their Affiliates, and the
officers, directors, employees, agents and
representatives of the AMCI Parties and
their Affiliates.
"AMCI Representative" means Hans J. Mende.
"Base Amount" means $35,000,000, which is the estimated amount
of the Working Capital Balance as of the
Closing Date.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity,
practice, plan, occurrence, event,
incident, action, failure to act, or
transaction that forms or would be
reasonably likely to form the basis for any
specified consequence.
"Books and Records" means the original or true and complete
copies of all of the books and records of
the Asset Contribution Companies
pertaining to the Contributed Assets,
including but not limited to, customer
lists, employee records for those Employees
employed by the Company immediately
following the Closing Date, purchase orders
and invoices, sales orders and sales
order log books, credit and collection
records, plats, drawings and
specifications, environmental and mining
reports and studies, correspondence and
miscellaneous records with respect to
customers and supply sources, lessors and
lessees, maps, core logs, engineering data,
equipment maintenance records and
all other general correspondence, records,
books and files owned by any Asset
Contribution Company, but excluding any and
all Tax Returns, books and records
relating to the Retained Liabilities and
corporate records of the Asset
Contribution Companies.
"Business Day" means any day other than a Saturday, a Sunday
or a United States federal or New York
State banking holiday.
"CERCLA" has the meaning set forth in the definition of
"Environmental Law."
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"Classified Employee" means any Employee whose employment is
governed by any of the Collective
Bargaining Agreements. The term "current and
former Classified Employees" means any
Persons who fall within the term
Classified Employee at any time on or prior
to the Closing Date.
"Classified Employee Medical Plans" means (a) the Benefit
Plans for United Mine Workers of America
Represented Employees maintained by
Virginia Crews Coal Company (1998) and
Herndon Processing Company (1998); and
(b) successors to each of those Plans that
are scheduled to go into effect on
January 1, 2003.
"Classified Employment" means employment, the terms of which
are governed by a collective bargaining
agreement between an employer and the
UMWA, including any of the Collective
Bargaining Agreements.
"Closing Date" means the date of the Closing.
"Coal Act" means the Coal Industry Retiree Health Benefit Act
of 1992 as amended (codified at Subtitle J
of the Code).
"Coal Act Retiree Medical Plans" mean the Benefit Plans for
United Mine Workers of America Represented
Employees maintained by Virginia
Crews Coal Company (1988) and Herndon
Processing Company (1988).
"Coal Acquisition Agreements" means those certain agreements
entered into: (a) on October 29, 2002 among
the Company and certain Subsidiaries
of the Company, on the one hand, and
Pittston Coal Company and certain of its
Affiliates, on the other hand (the
"Pittston Agreement"); (b) on November 14,
2002 between a Subsidiary of the Company
and El Paso CPG Company (the "Coastal
Agreement"); and (c) on various dates among
the Company and certain of its
Subsidiaries, on the one hand, and various
financing sources and their
Affiliates, on the other hand, with respect
to the financing of the transactions
contemplated by this Agreement, the
Pittston Agreement and the Coastal
Agreement.
"COBRA"
means the Consolidated Omnibus Budget Reconciliation
Act of 1986, as amended.
"Code" means the Internal Revenue Code of 1986, and the rules
and regulations promulgated thereunder, as
amended, and any reference to a
section of the Code shall include any
successor section or provision of the
Code.
"Collective Bargaining Agreements" means, collectively, the
(a) Memorandum of Understanding Between
Virginia Crews Coal Company and
International Union, United Mine Workers of
America; dated August 1, 1998 and
November 18, 2002; Agreement between
Virginia Crews Coal Company and the
International Union, United Mine Workers of
America Agreement,
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dated August 1, 1998 and November 18, 2002;
Memorandum of Understanding
Regarding Job Opportunities between the
United Mine Workers of America and
Virginia Crews Coal Company dated August 1,
1998 and November 18,2002; Letter
Agreement between Virginia Crews Coal
Company and the International Union,
United Mine Workers of America, dated
October 31, 2002; Agreement between
Herndon Processing Company and the
International Union, United Mine Workers of
America, dated July 23, 1998 and its
successor agreement effective January 1,
2003; Memorandum of Understanding Between
Herndon Processing Company and United
Mine Workers of America dated July 23, 1998
and its successor agreement
effective January 1, 2003; Memorandum of
Understanding Regarding Job
Opportunities between the United Mine
Workers of America and Herndon Processing
Company dated July 23, 1998 and to its
successor agreement effective January 1,
2003; (b) any and all employee benefit
plans or programs maintained thereby or
incorporated therein; and (c) any
precedential grievance settlements,
arbitration decisions and binding past
practices or customs; and any and all
other memoranda of understanding and local
or district agreements incorporated
by reference therein or attached
thereto.
"Commitment" means (a) options, warrants, convertible
securities, exchangeable securities,
subscription rights, conversion rights,
exchange rights or other contracts that
could require a Person to issue any of
its Equity Interests or to sell any Equity
Interests it owns in another Person;
(b) any other securities convertible into,
exchangeable or exercisable for, or
representing the right to subscribe for any
Equity Interest of a Person or owned
by a Person; (c) statutory pre-emptive
rights or pre-emptive rights granted
under a Person's Organizational Documents;
and (d) stock appreciation rights,
phantom stock, profit participation,
guarantee of profit, guarantee against
loss, or other similar rights with respect
to a Person.
"Company's Affiliates, Successors, Assigns, Lessees or
Contractors" means the Company's Affiliates
or one of their contractual
successors and assigns, and lessees and
contractors who, as part of a
contractual arrangement with the Affiliate,
offer employment to the current or
former Employees of the Subject
Companies.
"Company Employment Agreement" means that certain employment
agreement by and between the Company and
each of Kroh, Quillen and Thrasher, the
form of which is attached to this Agreement
as Exhibit C.
"Contaminated" means the presence of one or more Hazardous
Substances in such quantity or
concentration as to: (i) violate any
Environmental Law; (ii) require disclosure
to any Governmental Authority; (iii)
require remediation or removal; (iv)
interfere with or prevent the customary use
of the Real Property owned by the
Contributed Companies or included in the
Contributed Assets; or (v) create any
contribution Liability to fund the clean
up of the Real Property.
"Contracts" shall mean all of the contracts or agreements,
written and oral, of the Contributed
Companies or the Asset Contribution
Companies related to the Contributed Assets
excluding Collective Bargaining
Agreements.
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"Contributed Assets" means all the properties and assets used
or held for use in the Business that are
owned by the Asset Contribution
Companies, whether or not located on their
premises or shown on the Financial
Statements, including, all right, title and
interest in and to the Closing Date
Inventory, Equipment, Books and Records,
Real Property, Mining Data and
Intellectual Property of the Asset
Contribution Companies and the rights of the
Asset Contribution Companies with respect
to the Contracts and the Permits.
"Decree" means any injunction, judgment, order, decree or
ruling of any applicable Governmental
Authority.
"Employee" means any Person (i) employed by and rendering
personal services for a Subject Company,
(ii) receiving short-term or long-term
disability benefits from a Subject Company
under an Employee Benefit Plan or on
vacation or an approved leave of absence,
or (iii) laid-off from and on a panel
maintained by a Signatory Company under a
Collective Bargaining Agreement. The
term "current and former Employees" means
any Persons who fall within the term
Employee at any time prior to the Closing
Date.
"Encumbrances" means any mortgage, pledge, lien, encumbrance,
charge, restriction on transfer, other
security interest or defect in title.
"Environment" means surface or ground water, water supply,
soil or the ambient air.
"Environmental Laws" means collectively, all applicable
federal, foreign, state, and local Laws in
effect as of the Closing Date that
relate to (a) the prevention, abatement or
elimination of pollution, or the
protection of the Environment, or of
natural resources, including, without
limitation, Laws applicable to coal mining
operations or related activities, (b)
the generation, handling, treatment,
storage, disposal or transportation of
waste materials, (c) the regulation of or
exposure to Hazardous Substances,
including, without limitation, the
Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C.
Sections 9601 et. Seq. ("CERCLA"), the
Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sections 6901
et. seq. ("RCRA"), the Clean Air Act,
42 U.S.C. Sections 7401 et. seq., the Clean
Water Act, 33 U.S.C. Sections 1251
et. seq., the Toxic Substances Control Act,
15 U.S.C. Sections 2601 et. seq. and
the Emergency Planning and Community Right
to Know Act, 42 U.S.C. Sections 11001
et. seq.
"Environmental Matter" means any assertion of a violation,
claim or directive by any Governmental
Authority or any other Person for
personal injury, damage to property or the
Environment, nuisance, contamination
or other adverse effects on the
Environment, or for damages or restrictions
resulting from or related to (i) the
operation of the Business or any
predecessor or the ownership, use or
operation at or on any real property or
other assets owned, operated or leased by
the AMCI Parties or any predecessor;
or (ii) the existence or the continuation
of a Release of, or exposure to, or
the transportation, storage or treatment of
any Hazardous Substance into the
Environment from or related to any real
property or assets currently or formerly
owned, operated or leased by the AMCI
Parties or its Affiliates or any
activities on or operations thereof.
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"Environmental or Response Action" means all actions required
(i) to clean up, remove, treat or in any
other way address any Hazardous
Substance or other substance; (ii) to
prevent the Release or threat of Release,
or minimize the further Release of any
Hazardous Substance or other substance so
it does not migrate or endanger or threaten
to endanger public health or welfare
or the indoor or outdoor Environment; (iii)
to perform pre-remedial studies and
investigations or post-remedial monitoring
and care; (iv) to bring facilities on
any real property currently or formerly
owned, operated or leased by the AMCI
Parties or its Affiliates and the
facilities located and operations conducted
thereon into compliance with all
Environmental Laws and Reclamation Laws and all
permits and other authorizations, and the
filing of all notifications and
reports required under any Environmental
Laws and Reclamation Laws; or (v) for
the purpose of environmental protection of
any real property currently or
formerly owned, operated or leased by the
AMCI Parties or its Affiliates.
"Equipment" means the material tangible machinery, vehicles,
equipment, furniture, fixtures,
furnishings, trailers, tools, parts and other
personal property owned or leased by the
Subject Companies listed in (a) Section
1.1(a)(i) of the AMCI Disclosure Schedule,
in the case of owned Equipment, and
(b) Section 1.1(a)(ii) of the AMCI
Disclosure Schedule, in the case of leased
Equipment.
"Equity Interest" means (a) with respect to a corporation, any
and all shares of capital stock and any
Commitments with respect thereto, (b)
with respect to a limited liability
company, trust or similar Person, any and
all units, interests or other limited
liability company interest, and any
Commitments with respect thereto, and (c)
any other direct equity ownership,
participation in a Person and any
Commitments with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" shall mean a national banking association
acceptable to the AMCI Parties and the FRC
Parties selected as escrow agent
pursuant to the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement among the
AMCI Representative, the FRC Parties and
the Escrow Agent, which shall be in a
form acceptable to the AMCI Parties, the
FRC Parties and the Escrow Agent. The
Escrow Agreement shall provide that: (a)
the Escrowed Amount shall be disbursed
at the direction of the FRC Parties upon
their learning that the AMCI Parties
have not satisfied any obligation of the
AMCI Parties under Section 8.2(b)(iv)
as it relates to clauses (ix) and (xxiii)
of the definition of Retained
Liabilities; (b) the Escrowed Amount and
all earnings thereon shall be released
to the AMCI Parties at such time as there
are no further Liabilities of the type
described in clauses (ix) and (xxiii) of
the definition of Retained Liabilities;
and (c) the AMCI Parties can replace the
Escrowed Amount with an irrevocable
letter of credit or other property
satisfactory the FRC Parties.
"Escrowed Amount" shall have the meaning ascribed to such term
in Section 2.7(g).
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"FRC Parties Closing Certificate" means the certificate of the
FRC Parties substantially in the form of
Exhibit D attached to this Agreement.
"FRC Parties Indemnitees" means, collectively, the FRC Parties
and their Affiliates, and the officers,
directors, employees and agents of the
FRC Parties and their Affiliates.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time,
consistently applied.
"Governmental Authority" means any agency, authority, board,
bureau, commission, court, tribunal,
department, office or instrumentality of
any nature whatsoever or any governmental
unit, whether federal, state, county,
district, city, other political
subdivision, or taxing district, foreign or
otherwise, and whether now or hereafter in
existence, or any officer or official
thereof acting in an official capacity.
"Hazardous Substances" means any substance, chemical, waste,
solid, material, pollutant or contaminant
that is defined or listed as hazardous
or toxic under any applicable Environmental
Laws. Without limiting the
generality of the foregoing, it shall also
include any radioactive material,
including any naturally-occurring
radioactive material, and any source, special
or by-product material as defined in 42
U.S.C. 2011, et seq., any amendments or
authorizations thereof, any
asbestos-containing materials in any form or
condition, any polychlorinated biphenyls in
any form or condition, radioactive
waste, or natural gas, natural gas liquids,
liquefied natural gas, condensate,
or derivatives or byproducts thereof or oil
and petroleum products or by
products and constituents thereof.
"Health and Safety Requirements" means all applicable federal,
state, local and foreign Laws concerning
public health and safety and worker
health and safety each as in effect as of
the Closing Date, other than
Environmental Laws.
"HIPAA" means the Health Insurance Portability and
Accountability Act of 1996, as amended, and
all rules and regulations
thereunder.
"Intellectual Property" means the trademarks, service marks,
patents, copyrights (including any
registrations, applications, licenses or
rights relating to any of the foregoing)
technology, logos, trade secrets,
confidential information related to the
Contributed Interests, inventions,
know-how, designs, technical data,
drawings, customer and supplier lists,
pricing and cost information, or computer
programs and processes and all
goodwill associated therewith and rights
thereunder, remedies against
infringements thereof, and rights to
protection of interests therein under the
laws of all jurisdictions owned or licensed
or leased by any of the Subject
Companies.
"Knowledge of the AMCI Parties" means the actual knowledge of
the individuals listed in Section 1.1(b)(i)
of the AMCI Disclosure Schedule and
what such individual would
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reasonably been expected to have known
after reasonable inquiry within the scope
of such individual's job
responsibilities.
"Knowledge of the FRC Parties" means the actual knowledge of
the individuals listed in Section
1.1(b)(ii) of the FRC Disclosure Schedule and
what such individual would reasonably been
expected to have known after
reasonable inquiry within the scope of such
individual's job responsibilities.
"Law" means any statute, code or regulation of any applicable
Governmental Authority.
"Lien" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest other than (a)
liens for Taxes not yet due and
payable or for Taxes that the taxpayer is
contesting in good faith through
appropriate proceedings, (b) purchase money
liens and liens securing rental
payments under capital lease arrangements,
and (c) other liens arising in the
Ordinary Course of Business and not
incurred in connection with the borrowing of
money.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether
absolute or contingent, whether accrued
or unaccrued, whether liquidated or
unliquidated, and whether due or to become
due), including any liability for
Taxes.
"Material Adverse Effect" means any event, change or
occurrence that individually, or together
with any other event, change or
occurrence, has a material adverse impact
on the Business, taken as a whole,
without regard to the duration of such
material adverse impact; provided that in
determining whether a Material Adverse
Effect has occurred, the following
changes or effects shall not be considered
and shall be deemed not to constitute
a Material Adverse Effect: (i) the coal
mining industry generally (including,
but not limited to, the price of coal and
the costs associated with the mining,
production and delivery of coal), (ii)
United States or global economic
conditions or financial markets in general,
(iii) changes which to the Knowledge
of the FRC Parties are likely to result
from actions taken or to be taken in
connection with the transactions
contemplated by this Agreement, (iv) changes in
Law, or any Decrees that apply generally to
similarly situated Persons, (v) any
change or effect to the extent constituting
or involving a Retained Asset or a
Retained Liability, and (vi) any change in
or effect on the Contributed
Interests which is cured (including by
payment of money) before the earlier of
the Closing and the termination of this
Agreement pursuant to Section 11.1.
"Material Leased Real Property Rights and Interests" means the
leases or subleases and the related real
property rights and interests of the
Contributed Companies and Asset
Contribution Companies, including, without
limitation, the coal leases, coal subleases
and surface leases, (i) which, if
any such lease or sublease were to
terminate, would adversely effect the
continuation of a material portion of the
business or operations of any one of
the Contributed Interests or (ii) that
involve the payment or impose a liability
of more than $100,000 in any calendar
year.
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"MD&A Disclosure" means any "Management's Discussion and
Analysis of Financial Condition and Results
of Operations" disclosure (required
by Item 303 of Regulation S-K promulgated
by the SEC (or any successor rule or
regulation of the SEC)) to be prepared for
the fiscal years covered by the
audited Financial Statements and the period
covered by the Audited Closing Date
Financial Statements.
"Medical Plans" means any and all benefit plans that provide
medical, dental, vision, sickness and
accident, life, death, and/or accidental
death and dismemberment benefits to current
or former Employees sponsored or
maintained by or on behalf of, or for the
benefit of any Subject Company.
"Member"
means each of the Persons with an ownership interest
in the Company that executes a counterpart
of the Company Agreement as a Member
and each of the Persons who may hereafter
become Members.
"Membership Interest" means the percentage interest of the
Members in distributions, voting rights and
other incidents of ownership of the
Company, which are expressed as "Sharing
Ratios" in the Company Agreement and
are specified in Appendix A thereto.
"Mining Activities" means those activities of the Contributed
Companies and the Asset Contribution
Companies related to the Contributed Assets
that involve surface, underground and auger
mining, processing, sale or
transporting of coal (including, the
operation of an ocean going port in Nova
Scotia, Canada), the operation of bulk
materials handling and coal processing
facilities, and the handling of coal
by-products.
"Mining Environmental Liabilities" means Liabilities that
relate to or arise from both of the
following: (i) any of the Hazardous
Substances set forth in Section 1.1(c) of
the AMCI Disclosure Schedule and (ii)
an Environmental Matter or Environmental
and Response Action associated with
Mining Activities to the extent that such
Mining Activities conformed to
industry standard practices at the time
such Mining Activities were conducted.
"Mining Title" means fee simple title to surface and/or coal
or an undivided interest in fee simple
title thereto or a leasehold interest in
all or an undivided interest in surface
and/or coal together with no less than
those real property easements, licenses,
privileges, rights and appurtenances as
a necessary to mine, remove, process and
transport coal in the manner presently
operated by the Subject Companies.
"Non-Classified Employee" means an Employee, the terms of
whose employment are not or were not, at
the time of the determination of the
Employee's status, governed by a collective
bargaining agreement, including any
of the Collective Bargaining
Agreements.
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Non-Classified Employee Medical Plans" means the Benefit Plan
for Salaried Employees, the Highmark
SelectBlue Medical and Prescription Plan,
the Tanoma Energy Dental Plan, the
Principal Life Insurance Plan, the Employee
Benefits Programs of American Metals &
Coal International, Inc., and all other
Non-Classified Employee Benefit Plans
sponsored by the Subject Companies or
maintained by, on behalf of or for the
benefit of the Subject Companies or their
current or former Employees that provide
dental , life insurance, short and long
term disability, and/or accidental death
and dismemberment benefits to
Non-Classified Employees and their eligible
dependents.
"Non-Signatory Company" means any Contributed Company or Asset
Contribution Company listed in Section
1.1(d) of the AMCI Disclosure Schedule.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and
practice (including with respect to
quantity and frequency).
"Organizational Documents" means the articles of
incorporation, certificate of
incorporation, charter, bylaws, articles or
certificate of formation, regulations,
operating agreement, certificate of
limited partnership, partnership agreement,
and all other similar documents,
instruments or certificates executed,
adopted, or filed in connection with the
creation, formation, or organization of a
Person, including any amendments
thereto.
"Parts, Fuel and Supplies Inventory" shall include the
categories of items listed in Section
1.1(e) of the AMCI Disclosure Schedule.
"Permits" means the written permits, licenses, orders,
certificates, registrations, approvals and
similar rights issued by a
Governmental Authority and held by the
Subject Companies and listed in Section
1.1(f) of the AMCI Disclosure Schedule.
"Permitted Encumbrances" means any of the following: (i) any
liens for Taxes and assessments not yet
delinquent or, if delinquent, that are
being contested in good faith in the
Ordinary Course of Business; (ii) any
obligations or duties reserved to or vested
in any municipality or other
Governmental Authority to regulate any
Contributed Assets or the assets of any
Contributed Companies in any manner
including all applicable Laws; (iii)
mechanic's, materialmen's, and similar
liens; (iv) purchase money liens and
liens securing rental payments under
capital lease arrangements; (v) any liens
or other Encumbrances created pursuant to
operating, construction, operation and
maintenance, space lease or similar
agreements or the Organizational Documents
of the Contributed Companies; and (vi) any
Encumbrances set forth in Section
1.1(g) of the AMCI Disclosure Schedule.
"Person" means any individual, general partnership, limited
partnership, limited liability company,
corporation, joint venture, trust,
business trust, Governmental Authority,
cooperative, association or any foreign
trust or foreign business organization or
any other entity of any kind
whatsoever, as well as the heirs,
executors, administrators, legal
representatives, successors and assigns of
such "person" where the context so
requires.
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"Phantom Stock Plan" means that certain AMCI Export, Inc.
Phantom Stock Plan, which is a plan adopted
by AMCI Export and dated January 5,
1994.
"Post-Closing Period" means any taxable period beginning after
the Closing Date.
"Pre-Closing Period" means any taxable period ending on or
before the Closing Date.
"RCRA" has the meaning set forth in the definition of
"Environmental Law."
"Real Property" means the real property rights and interests
owned, leased or subleased by the
Contributed Companies and Asset Contribution
Companies and any improvements, fixtures,
easements, rights of way, and other
appurtenants thereto (such as appurtenant
rights in and to public streets) that
are listed in (a) Section 1.1(h)(i) of the
AMCI Disclosure Schedule, in the case
of the owned real property rights and
interests, and (b) Section 1.1(h)(ii) of
the AMCI Disclosure Schedule, in the case
of the leased or subleased real
property rights and interests.
"Reclamation Laws" means all federal, state and local Laws, as
now or hereafter in effect, relating to
coal mining reclamation activities or
Liabilities. For purposes of this
definition, "coal mining" shall include, but
not be limited to, any activities defined
under the Surface Mining Control and
Reclamation Act of 1977, as amended, as
"surface coal mining operations."
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting,
escaping, dumping or disposing into
the Environment of Hazardous
Substances.
"Retained Assets" means (a) as to the Asset Contribution
Companies, all of their assets, properties
and rights, other than the
Contributed Assets, (b) as to the
Contributed Companies, cash balances and
accounts receivable of the Contributed
Companies at Closing determined in
accordance with GAAP to the extent they are
not included as an asset in the
calculation of Working Capital balance as
of the Closing Date, (c) coal
inventories of the Subject Companies that
are located outside of the United
States, (d) coal inventories of the Subject
Companies in excess of the Closing
Date Inventory Amount, and (e) the assets,
properties and rights listed in
Schedule 1.1(i) of the AMCI Disclosure
Schedule.
"Retained Debt" means all obligations for borrowed money or
indebtedness owed by any of the Subject
Companies to any Person, except as set
forth in Section 1.1(k) of the AMCI
Disclosure Schedule.
"Retained Liabilities" means all of the Liabilities of each of
the Subject Companies, other than the
Assumed Liabilities, including, without
limitation the following, but, in each
case, only if and to the extent such
Liability was not included as a liability
in the calculation of the Working
Capital Balance as of the Closing Date:
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(i) all Liabilities arising under applicable Workers'
Compensation Acts for or based upon the
employment before the Closing Date of
the current and former Employees of the
Subject Companies who are not Employees
of the Contributed Companies on the Closing
Date, or hired by one of the
Company's Affiliates, Successors, Assigns,
Lessees or Contractors on or after
the Closing Date;
(ii) all Liabilities arising under the federal black
lung Laws for or based upon the employment
before the Closing Date of the
current and former Employees of the Subject
Companies who are not Employees of
the Contributed Companies on the Closing
Date or hired by one of the Company's
Affiliates, Successors, Assigns, Lessees or
Contractors on or after the Closing
Date;
(iii) all Liabilities for non-retiree medical,
dental, vision, sickness and accident,
life, death, accidental death and
dismemberment, disability, and other
benefits and expenses covered under the
Medical Plans, including related insurance
costs or premiums, for or based upon
the employment before the Closing Date of
the current and former Employees of
the Subject Companies who are not Employees
of the Contributed Companies on the
Closing Date or hired by one of the
Company's Affiliates, Successors, Assigns,
Lessees or Contractors on or after the
Closing Date, including all such
Liabilities under COBRA, HIPAA and other
Laws, including all Liabilities of a
fiduciary for breach of fiduciary duty or
any other failure to act or comply in
connection with the administration of such
Medical Plans;
(iv) all Liabilities arising under or based upon the
Employee Benefit Plans sponsored or
maintained by, on behalf of or for the
benefit of the Subject Companies or their
current or former Employees before the
Closing Date or in which the Subject
Companies participated in before the
Closing Date (other than the UMWA Plans and
the Medical Plans), including all
Liabilities arising from or related to the
termination thereof or Liabilities of
a Fiduciary for breach of fiduciary duty or
any other failure to act or comply
in connection with the administration or
investment of the assets of any such
Employee Benefit Plan, but only with
respect to Employee Benefit Plans that are
not continued (by merger or otherwise) by a
Contributed Company or assumed by
the Company or one of the Company's
Affiliates, Successors, Assigns, Lessees or
Contractors on or after the Closing
Date;
(v) all Liabilities for salaries, wages, bonuses,
vacation days, personal days and similar
forms of leave or compensation (a) for
or based upon the employment on or before
the Closing Date of the current and
former Employees of the Subject Companies
who are not Employees of the
Contributed Companies on the Closing Date
or hired by one of the Company's
Affiliates, Successors, Assigns, Lessees or
Contractors on or after the Closing
Date, and (b) that are accrued or earned
and for which such individuals are
eligible;
(vi) all
Liabilities for accounts payable for which
goods have been shipped and delivered
(whether or not invoiced) or services have
been performed (whether or not
invoiced)
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and related notes, trade payables and
earned royalties, to the extent that a
Subject Company received a benefit before
the Closing Date;
(vii) provided that the Company shall have fully
complied with its obligations under Article
X, all Liabilities for claims of any
current or former Employees pursuant to the
WARN Act arising out of acts or
omissions of the Subject Companies prior to
and including the Closing Date;
(viii) all Liabilities arising under the Coal Act, or
as it may be amended, which could be
imposed on the Subject Companies as Related
Persons to Tanoma Mining Company, Inc.
("TMC"), relating to (1) beneficiaries
eligible under the Coal Act who are
assigned to or for whom TMC is required to
provide or pay for medical benefits
pursuant to Sections 9711 or 9712 of the
Coal Act, or (2) death benefit premiums or
unassigned beneficiary premiums (as
those terms are used in Sections 9704(c)
and 9704(d) of the Coal Act) for
beneficiaries eligible under the Coal Act,
that are assessed against TMC. For
purposes of this subsection the term
"Related Persons" means those persons
defined in Section 9701(c)(2) of the Coal
Act;
(ix) all Liabilities for retiree medical benefits
provided through any Classified Employee
Medical Plan maintained pursuant to any
of the Collective Bargaining Agreements or
any Coal Act Retiree Medical Plan
maintained pursuant to the Coal Act, or as
it may be amended, in which such
Signatory Company participates as of the
Closing Date for (a) the current and
former Classified Employees (and their
eligible dependents and beneficiaries) of
the Signatory Company who, as of the
Closing Date, have retired and are
receiving benefits from any such Classified
Employee Medical Plan or Coal Act
Retiree Medical Plan and (b) the current
and former Classified Employees (and
their eligible dependents and
beneficiaries) of the Signatory Company who (i) ,
based on age, service and/or disability,
satisfy, as of the Closing Date, the
eligibility criteria in any such Classified
Employee Medical Plan or Coal Act
Retiree Medical Plan to receive retiree
health benefits and whose last signatory
Classified Employment is with the Signatory
Company and (ii) are not Employees
of the Contributed Companies on the Closing
Date or hired by one of the
Company's Affiliates, Successors, Assigns,
Lessees or Contractors on or after
the Closing Date;
(x) all Liabilities, if any, of such Subject
Companies for retiree medical benefits
provided through any Non-Classified
Employee Medical Plan to Non-Classified
Employees of such Subject Company (and
their eligible dependents and
beneficiaries) who, on or prior to the Closing
Date, satisfy the requirements for retiree
medical benefits under any
Non-Classified Employee Medical Plan in
which such Contributed Company or Asset
Contribution Company participates and who
have retired from such Contributed
Company or Asset Contribution Company prior
to the Closing Date;
(xi) all Liabilities relating to assets held in trust
under any Qualified Plan sponsored or
maintained by, on behalf of or for the
benefit of the Subject Companies or their
current or former Employees or in
which the Subject Companies participated
before the Closing Date (other than the
UMWA Plans) arising or relating to the
period prior to the Closing Date;
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(xii) all Liabilities with respect to withdrawal by
the Subject Companies or their Affiliates
on or before the Closing Date, if any,
from the UMWA Pension Plans or any other
Multiemployer Plan;
(xiii) all inter-company indebtedness owed by any
Contributed Company to any AMCI Party;
(xiv) all Liabilities arising out of or in connection
with compliance prior to the Closing Date
with Health and Safety Requirements
pertaining to the Contributed Interests,
and all Liabilities arising out of or
in connection with compliance prior to the
Closing Date with all Laws relating
to equal employment opportunity,
employment, or labor relations concerning
current or former Employees of the Subject
Companies who are not Employees of
the Contributed Companies on the Closing
Date or hired by the Company or one of
the Company's Affiliates, Successors,
Assigns, Lessees, or Contractors on or
after the Closing Date, or relating to any
other action taken or not taken by
the Subject Companies concerning the
current or former Employees who are not
Employees of the Contributed Companies on
the Closing Date or hired by the
Company or one of the Company's Affiliates,
Successors, Assigns, Lessees or
Contractors on or after the Closing
Date;
(xv) all Liabilities for the claims, legal actions,
suits, litigation, arbitrations,
grievances, disputes or investigations listed
in Section 1.1(j) of the AMCI Disclosure
Schedule;
(xvi) all Liabilities of any of the Subject Companies
for unpaid Taxes with respect to any Tax
year or portion thereof ending on or
before the Closing Date or for any Tax year
beginning before and ending after
the Closing Date to the extent allocable to
the portion of such period beginning
before and ending on the Closing Date;
(xvii) all amounts payable as the result of the
consummation of the transactions
contemplated by this Agreement that arise due
to any change of control provision of any
Contract relating to employment;
(xviii) all Liabilities of any of the Subject
Companies for the unpaid Taxes of any
Person under Reg. Section 1.1502-6 (or any
similar provision of state, local, or
foreign law), as a transferee or
successor, by contract, or otherwise;
(xix) all Liabilities for any Environmental Matter or
Environmental or Response Action related to
real property or any other asset
owned, operated or leased by AMCI Party
that is not a Contributed Interest;
(xx) all Liabilities for any Environmental Matter or
Environmental or Response Action (other
than Mining Environmental Liabilities)
to the extent the underlying claim relates
to or arises from any activity on or
through the use of the assets of the
Contributed Companies or the Contributed
Assets and is attributable to acts or
omissions occurring prior to the Closing
Date;
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(xxi) all Liabilities related to Retained Debt;
(xxii) all Liabilities arising out of or in
connection with the Phantom Stock Plan;
(xxiii) all Liabilities of the type covered by clause
(ix) above under any collective bargaining
agreements that do not pertain to or
arise out of any AMCI Party's ownership of
the Contributed Interests; and
(xxiv) all Liabilities not covered by clause (xxiii)
above under any collective bargaining
agreements that do not pertain to or arise
out of any AMCI Party's ownership of the
Contributed Interests.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Signatory Company" means any Asset Contribution Company
listed in Section 1.1(l) of the AMCI
Disclosure Schedule.
"Straddle Period" means a Tax period or year commencing before
and ending after the Closing Date.
"Straddle Return" means a Tax Return for a Straddle Period.
"Subsidiary" means with respect to any relevant Person, any
Affiliate that is (directly or indirectly)
controlled by such Person.
"Sysco" means Sydney Steel Corporation, a Crown Corporation of
the Province of Nova Scotia.
"Sysco Lease" means
that certain Lease Agreement made December
12, 2001 between Sysco and Provincial.
"Tax" or "Taxes" means any federal, state, local, or foreign
income, gross receipts, license, payroll,
employment, excise, severance, stamp,
occupation, premium, windfall profits,
environmental (including taxes under Code
Section 59A), custom duties, capital stock,
franchise, profits, withholding,
social security (or similar), unemployment,
disability, real property, personal
property, sales, use, transfer,
registration, value added, alternative or add-on
minimum, estimated, or other tax of any
kind whatsoever, whether computed on a
separate or consolidated, unitary or
combined basis or in any other manner,
including any interest, penalty, or
addition thereto, whether disputed or not
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and including any obligation to indemnify
or otherwise assume or succeed to the
Tax liability of any other Person.
"Tax Benefit" means the tax effect of any item of loss,
deduction or credit or any other item
(including increase in tax basis of
assets) which decreases Taxes paid or
payable including any interest in respect
thereto or interest that would have been
payable but for such item.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement
relating to Taxes, including any
schedule or attachment thereto, and
including any amendment thereof.
"Transaction Agreements" means this Agreement, the Company
Agreement, the Company Employment
Agreements, and the Member Agreement.
"UMWA" means the International Union, United Mine Workers of
America, including its district and local
unions.
"UMWA 1993 Benefit Plan" means the United Mine Workers of
America 1993 Benefit Plan and Trust."
"UMWA Pension Plans" means the United Mine Workers of America
1950 and 1974 Pension Plans and Trusts.
"UMWA Plans" means the UMWA 1993 Benefit Plan, the UMWA
Savings Plan, the UMWA Training Fund, and
the UMWA Pension Plans.
"UMWA Savings Plan" means the UMWA Cash Deferred Savings Plan
of 1988.
"UMWA Training Fund" means the UMWA-BCOA Training and
Education Fund.
"Workers' Compensation Acts" means Laws that provide for
awards to employees and their dependents
for employment-related accidents and
diseases.
"Working Capital Balance as of the Closing Date" means the
total current assets of the Subject
Companies as of the Closing Date (including
but not limited to the Closing Date Coal
Inventory and the Closing Date Parts,
Fuel and Supplies Inventory) less the total
current liabilities of the Subject
Companies as of the Closing Date, and
calculated in accordance with GAAP subject
to the Working Capital Adjustment Rules set
forth in Schedule 1.1(m).
1.2 Each of the
following terms is defined in the Section set
forth opposite such term:
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<TABLE>
<CAPTION>
TERM
SECTION
<S>
<C>
Agreement
Preamble
Alpine
Recital
AMCI Energy
Preamble
AMCI Entities
Preamble
AMCI Export
Recitals
AMCI Parties
Preamble
AMCI Parties Bonds
5.9
AMCI Resources
Preamble
American Metals
Preamble
AMCS
Recitals
Asset Contribution Company
Recitals
Assumed Liabilities
2.3
Barkers Ridge
Preamble
Base Amount
1.1
Beta
Preamble
Business
Recitals
CCSI
Recitals
CERCLIS
5.8(g)
Closing
2.7
Closing Date Coal Inventory
2.8(b)
Closing Date Parts, Fuel and Supplies
Inventory
2.8(c)
Company
Preamble
Company Agreement
Recitals
Contributed Assets
Recitals
Contributed Corporations
Recitals
Contributed Interests
Recitals
Contributed LLCs
Recitals
Conveyance Documents
2.7(j)
CPA Arbitrator
2.8(d)
Creekside
Recitals
Deerfield
Preamble
Dunamis
Recitals
Employee Benefit Plans
5.12(a)
EPA
5.8(d)
Financial Statements
5.4
Contribution Agreement
Preamble
FRC Capital Contribution
2.1
FRC Parties
Preamble
Guayandotte
Recitals
Harvey
Recitals
Herndon
Recitals
</TABLE>
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<TABLE>
<S>
<C>
I-22
Recitals
Indemnified Party
8.4(a)
Independent Surveyor
2.8(b)
Indian Ridge
Preamble
Kepler
Recitals
Kirmar
Preamble
KM
Preamble
Kroh
Recitals
Kundrun
Recitals
Laurel Resources
Recitals
Laurel Energy
Recitals
LMM
Preamble
Madison
Recitals
Material Contract
5.10(a)
Mende
Recitals
Metcoal
Recitals
Mining Data
5.5(i)
Most Recent Financial Statements
5.4
Most Recent Fiscal Month End
5.4
Most Recent Fiscal Year End
5.4
MSHA
5.8(d)
Multiemployer Plan
5.12(a)
Newhall Pocahontas
Recitals
Newhall Processing
Recitals
Nicola
Preamble
Open Fork
Recitals
Operator
5.8(a)
OSM
5.8(d)
Other Shareholders
Preamble
Parties
Preamble
Pension Plans
5.12(a)
Pledge Agreement
2.7(o)
Principal Shareholder
Preamble
Qualified Plans
5.12(a)
Quillen
Recitals
Redbank
Recitals
Riverside
Preamble
RRD
Preamble
Senate Coal
Recitals
Senate Resources
Preamble
SMCRA
5.8(e)
Solomons Group
Preamble
Solomons Mining
Recitals
</TABLE>
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<TABLE>
<S>
<C>
Still Run
Recitals
Subject Companies
Recitals
Tanoma Energy
Recitals
Thrasher
Recitals
Virginia Crews
Recitals
Vollow
Recitals
Welfare Plans
5.12(a)
</TABLE>
ARTICLE II
CONTRIBUTION
2.1 FRC Capital Contribution. Upon the terms and subject to
the conditions of this Contribution
Agreement, the FRC Parties severally agree
to contribute to the Company on the Closing
Date in cash an aggregate amount of
$78.5 million less any amounts contributed
to the Company prior to the Closing
Date (the "FRC Capital Contribution") in
immediately available funds, for which
agreement the FRC Parties will receive a
50.917% Membership Interest in the
Company as set forth in the Company
Agreement. Upon the making of the FRC
Capital Contribution, the FRC Parties will
be admitted as Members of the Company
under the terms of the Company
Agreement.
2.2 AMCI Capital Contribution. Upon the terms and subject to
the conditions of this Contribution
Agreement, the AMCI Parties severally agree,
and the Principal Shareholder agrees, to
cause the AMCI Parties, to convey,
transfer, assign and deliver to the
designated Subsidiary of the Company as
specified on Schedule 2.2, on the Closing
Date, free and clear of all Liens
other than Permitted Encumbrances all of
the Contributed Interests for which the
AMCI Parties shall receive a 48.921%
Membership Interest in the Company in the
aggregate as set forth in the Company
Agreement. Upon the contribution of the
Contributed Interests, the AMCI Parties
listed as signatories of the Company
Agreement will be admitted as Members of
the Company under the terms of the
Company Agreement.
2.3 Assumed Liabilities. Upon the terms and subject to the
conditions of this Agreement, the Company
agrees, effective at the time of
Closing, to cause the appropriate
Subsidiaries of the Company to assume the
specific liabilities set forth on Schedule
2.3 (the "Assumed Liabilities") and
no other Liability.
2.4 Retained Assets and Retained Liabilities.
(a) The Company is causing the relevant Subsidiaries
of the Company to assume only the Assumed
Liabilities and is not assuming or
causing to be assumed any other Liability
of any other Person (including the
AMCI Parties or any predecessor owner of
all or part of their business or
assets). Without limiting the generality of
the foregoing, neither the Company
nor any of its Subsidiaries shall assume
any of the Retained Liabilities.
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(b) The Company is accepting the contribution only of
the Contributed Interests and is not
accepting any other assets or interests of
any Person pursuant to this Agreement
(including AMCI entities or any
predecessor owner of all or part of its
business or assets). Without limiting
the generality of the foregoing, the
Company shall not accept the contribution
any of the Retained Assets.
(c) On the Closing Date, the AMCI Parties (other than
the Contributed Companies) shall retain the
Retained Liabilities and shall be
entitled to receive any proceeds,
recoveries (monetary or otherwise) and
benefits and burdens associated with the
Retained Assets and the Retained
Liabilities. On or prior to the Closing
Date, the AMCI Parties shall cause the
Retained Assets and Liabilities to be
assigned or otherwise transferred to an
AMCI Party or a third party designated by
the AMCI Parties (or, in the case of
the Retained Debt, the AMCI Parties shall
(i) cause such Retained Debt to be
assigned or otherwise transferred to an
AMCI Party or a third party or (ii)
fully pay and satisfy such Retained Debt).
To the extent that any of the
Retained Assets and Retained Liabilities
cannot be assigned or otherwise
transferred to the AMCI Parties or their
designees prior to the Closing Date
(including without limitation where such an
assignment or transfer would
constitute a breach or default under any
agreement, encumbrance or commitment,
would violate any Law or Decree or would in
any way adversely affect the rights
or increase the obligations of the AMCI
Parties or their designees), then the
FRC Parties, without having to incur or
suffer any Adverse Consequences, and the
AMCI Parties will execute and deliver any
other documents, certificates,
agreements and other writings, and take
such other actions, in each case, as may
be reasonably necessary or desirable in
order to provide or impose upon the AMCI
Parties or its designee the benefits and
the obligations associated with such
Retained Assets and Retained
Liabilities.
2.5 Attempted Assignment of Contributed Interests and Assumed
Liabilities. If any attempted assignment or
assumption of any of the Contributed
Interests pursuant to this Agreement would
(i) constitute a breach or default
under any Contract, (ii) violate any Law or
(iii) adversely affect the rights,
or increase the obligations of the Company,
so that the Company would not, in
fact, receive all such rights, or assume
the obligations, of the AMCI entities
with respect thereto as they exist prior to
such attempted assignment or
assumption, then the AMCI Parties and the
Company, without having to incur or
suffer any Adverse Consequences, shall
enter into such arrangements as may be
reasonably acceptable to both the Company
and the AMCI Parties to provide for or
impose upon the Company the benefits of
such Contributed Interests or the
obligations of such Assumed Liabilities, as
the case may be, and any transfer or
assignment to the Company by the AMCI
Parties of any such Contributed Interest,
or any assumption by the Company of any
such Assumed Liabilities, which shall
require such consent or authorization of a
third party that is not obtained,
shall be made subject to such consent or
authorization being obtained.
2.6 Proration of Liabilities; Intercompany Transactions.
(a) The AMCI Parties and the FRC Parties shall
cooperate with each other to provide for
payments due with respect to the
Assumed Liabilities and the Retained
Liabilities
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during the payment period in which the
Closing occurs with all such Liabilities
prorated as of the Closing Date, if
applicable.
(b) Immediately before the Closing, all outstanding
receivables and payables between the AMCI
Parties and their Affiliates (other
than the Contributed Companies), on the one
hand, and the Contributed Companies,
on the other hand, shall be satisfied and
discharged, without any post-Closing
Adverse Consequences to the FRC Parties,
the Contributed Companies or the
Contributed Assets, except to the extent
such receivables and payables relate to
or arise under any agreement listed in
Section 2.6 of the AMCI Disclosure
Schedule between the AMCI Parties (or their
Affiliates (other than the
Contributed Companies)) and the Contributed
Companies which will not be
terminated prior to, or at, the Closing.
Except as otherwise contemplated by
this Agreement and for those listed in
Section 2.6 of the AMCI Disclosure
Schedule, all other intercompany
transactions or arrangements between the
Contributed Companies, on the one hand, and
the AMCI Parties or any of their
Affiliates (other than the Contributed
Companies), on the other hand, shall be
terminated as of the Closing, in such
manner as the AMCI Parties shall specify,
without imposing Adverse Consequences upon
the FRC Parties or the Contributed
Companies, and none of the parties shall
have any further Liability in respect
of any such transaction or arrangement.
2.7 Closing. Unless the Parties otherwise agree, the closing
(the "Closing") of the transactions
contemplated by this Agreement shall take
place at the offices of First Reserve
Corporation in Greenwich, Connecticut
beginning at 10:00 AM (local time) no later
than the third business day after
the satisfaction of all conditions
precedent specified in Article VII. All of
the transactions at the Closing shall be
deemed to occur simultaneously. At the
Closing:
(a) the FRC Parties and the AMCI Parties listed as
signatories of the Company Agreement shall
execute the Company Agreement;
(b) the FRC Parties, to the extent not theretofore
contributed, shall contribute the FRC
Capital Contribution to the Company;
(c) the AMCI Entities shall convey and contribute the
Contributed Interests as provided in
Section 2.2;
(d) the AMCI Entities and the FRC Parties (to the
extent that it has not already done so)
each shall subscribe for and acquire
Membership Interests in the Company by
executing and delivering a Subscription
Agreement substantially in the form of
Exhibit E;
(e) the appropriate Subsidiaries of the Company shall
execute and deliver the assumption and
assignment agreements pursuant to which
they shall assume the Assumed
Liabilities;
(f) the Company and each of Kroh, Quillen and
Thrasher shall execute and deliver the
Company Employment Agreement;
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(g) the Company shall distribute cash in the amount
of (x) $11.54 million plus (y) the Base
Amount to the AMCI Parties as designated
by the AMCI Representative; provided that
on the terms and subject to the
conditions of the Escrow Agreement, the
Company shall to deliver into escrow at
the Closing, an amount equal to $2.5
million of the amount specified in clause
(x) (the "Escrowed Amount").
(h) the Company and each of the relevant AMCI
Entities named therein shall execute and
deliver the Cooperation Agreement in
the form of Exhibit F pursuant to which the
Company and its Affiliates, and such
AMCI Entities shall provide each other
certain information and other assistance
in connection with the collection,
administration and/or satisfaction of certain
of the Retained Liabilities;
(i) the Company, K-M and LMM shall, and K-M shall
cause its wholly owned Subsidiary, AMCI
Inc. to, execute and deliver the
Administrative Services Agreement in the
form of Exhibit G pursuant to which the
parties to such Administrative Services
Agreement will provide one another with
certain services for a transition
period;
(j) the AMCI Entities shall deliver or cause to be
delivered to the Company such stock powers,
endorsements, deeds, bills of sale
and other good and sufficient instruments
of conveyance and assignment (the
"Conveyance Documents") as shall be
necessary to vest in the appropriate
Subsidiaries of the Company all of the AMCI
Entities' right, title and interest
in, to and under the Contributed
Interests;
(k) the FRC Parties shall deliver to the AMCI Parties
a copy of their Organizational Documents,
good standing certificates,
resolutions of the board of directors or
other governing bodies, secretaries'
certificates and officers' certificates, in
each case, relating to the existence
of the FRC Parties and the authority of the
FRC Parties to execute the
Transaction Agreements to which it is a
party, all in form and substance
reasonably satisfactory to the AMCI Parties
and their counsel;
(l) the AMCI entities shall deliver to the FRC
Parties copies of their Organizational
Documents, good standing certificates,
resolutions of governing bodies,
secretaries' certificates, in each case,
relating to the existence of the AMCI
entities and the authority and capacity of
the AMCI Parties to execute the Transaction
Agreements to which it is a party,
all in form and substance reasonably
satisfactory to the FRC Parties and their
counsel;
(m)
the AMCI Parties listed as signatories in the
Member Agreement, dated as of the Closing
Date in the form of Exhibit H (the
"Member Agreement") and the FRC Parties
shall execute and deliver the Member
Agreement;
(n) the relevant AMCI Entities and Contributed
Companies and the relevant Subsidiaries of
the Company shall (i) execute all
such required plans of merger or merger
agreements in mutually agreeable form
and (ii) execute and file (with the
appropriate Secretary of State or other
State or Commonwealth official) the
certificates of merger or articles of merger
in mutually
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agreeable form, all as necessary to
complete the mergers contemplated by
Schedule 2.2, with such changes as are
required to satisfy all requirements of
applicable law (collectively, all such
plans of merger, merger agreements,
certificates of merger or articles of
merger are referred to as the "Merger
Documents");
(o) each of the AMCI Parties that will hold
Membership Interests and the FRC Parties
shall execute and deliver the Pledge
Agreement, dated as of the Closing Date in
a form acceptable to the AMCI Parties
and the FRC Parties (the "Pledge
Agreement"); and
(p) each of the AMCI Parties that will participate in
the deposit of the Escrowed Amount and the
FRC Parties shall execute and deliver
the Escrow Agreement.
2.8 Working Capital Balance.
(a) In accordance with the provisions of this Section 2.8: (i)
the Company shall pay the AMCI
Representative the amount, if any, by which the
Working Capital Balance as of the Closing
Date (as calculated in accordance with
paragraphs (b) and (c) of this Section 2.8)
is finally determined pursuant to
Section 2.8(d) to be greater than the Base
Amount; and (ii) the AMCI Parties
shall cause the AMCI Representative to pay
the Company the amount, if any, by
which the Working Capital Balance as of the
Closing Date (as calculated in
accordance with clauses (b) and (c) of this
Section 2.8) is finally determined
pursuant to Section 2.8(d) to be less than
the Base Amount. Such payment shall
constitute an adjustment to the relative
contributions made by the AMCI Parties
to the Company and shall be paid by wire
transfer of cash or other immediately
available funds within three business days
after the completion of the
procedures contemplated in paragraphs (b)
and (c) of this Section 2.8; provided,
however, that if the Working Capital
Balance is (x) greater than $35 million,
then the Company shall be entitled to defer
payment of the amount in excess of
$35 million for up to 90 days after the
Working Capital Balance has been finally
determined, or (y) less than $35 million,
then the accounts payable used to
determine the Working Capital Balance shall
be reduced so that the Working
Capital Balance equals $35 million and the
amount so reduced shall be treated as
a Retained Liability.
(b) No later than three days before the Closing Date, the
parties will agree upon the density of the
various stockpiles that constitute
the Subject Companies' coal inventory
located in the United States. Within three
business days after the Closing, the AMCI
Parties and the Company shall cause
Tuck Engineering, Inc., CME Engineering,
Inc., Alliance Consulting and Soward
Miller & Associates or such other
surveying firm or firms mutually acceptable to
the FRC Parties and the AMCI Parties (the
"Independent Surveyors") to prepare
and deliver to each of them surveys of all
coal inventory of the Subject
Companies located in the United States as
of the Closing (the "Closing Date Coal
Inventory"). Tuck Engineering, Inc. shall
survey the coal inventory located in
Kentucky, CME Engineering, Inc. shall
survey the coal inventory located in
Pennsylvania, Alliance Consulting shall
survey the coal inventory located in
West Virginia and Soward Miller &
Associates shall survey the coal inventory
located in Colorado. Such surveys shall be
conducted in accordance with the
principles set forth on and shall be in
substantially the format attached to
this
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Agreement as part of Schedule 2.8(b). The
AMCI Parties and the Company shall,
and shall cause their respective Affiliates
to, cooperate with and make
available any information reasonably
requested by the Independent Surveyors in
their preparation of the surveys of the
Closing Date Coal Inventory. All
determinations made by the Independent
Surveyors in their surveys of the Closing
Date Coal Inventory shall be final, binding
and conclusive on the parties. The
Company shall pay the fees and costs of the
Independent Surveyors and any other
third party retained by it in connection
with the calculation of the Closing
Date Coal Inventory pursuant to this
Section 2.8(b).
(c) Within three business days before the Closing, the AMCI
Parties and the Company shall perform a
physical count of all Parts, Fuel and
Supplies Inventory of the Subject Companies
as of the Closing Date (the "Closing
Date Parts, Fuel and Supplies Inventory").
Such physical count shall be valued
on a cost basis for new items and on a fair
market value basis for all other
items, taking into consideration the age,
condition and usefulness of the item.
The AMCI Parties and the Company shall, and
shall cause their respective
Affiliates to, cooperate with and make
available any information reasonably
requested by the parties in their
performance of the physical count.
(d) The AMCI Parties and the Company will use commercially
reasonable efforts to resolve any
differences regarding the calculation of the
Working Capital Balance within seven
business days after the Closing. If the
AMCI Parties and the Company cannot resolve
any such differences within seven
business days after the Closing, the
parties agree to submit any such
differences to arbitration in Abingdon,
Virginia, by the accounting firm of
Deloitte & Touche, LLP or another
accounting firm mutually acceptable to both
parties (the "CPA Arbitrator") to resolve
such differences. The CPA Arbitrator
shall make such review and examination of
the relevant facts and documents as
the CPA Arbitrator deems appropriate, and
shall permit each of the Company and
the AMCI Parties to make a written
presentation of their respective positions.
Within forty-five (45) days after
submission of such dispute by both parties,
the CPA Arbitrator shall resolve all
disputed items in writing and shall prepare
and deliver its decision, which shall be
final and binding upon the parties
without further recourse or collateral
attack and, as to each disputed matter,
shall accept either the Company's or the
AMCI Parties' position in its entirety
and the party whose position is not
accepted by the CPA Arbitrator on a
particular disputed matter shall pay all
fees and costs of such CPA Arbitrator
to arbitrate such disputed matter.
2.9 Pledge of Membership Interests. Pursuant to the Pledge
Agreement: (a) the Membership Interest of
the AMCI Parties having a fair market
value of not less than $36 million shall be
pledged to secure the obligation of
the AMCI Parties under Section 8.2(b)(iv)
as it relates to clauses (ix) and
(xxiii) of the definition of Retained
Liabilities; (b) the FRC Parties shall be
entitled to call for additional collateral
if the value of the collateral
deposited has depreciated or been
previously called such that the value of the
remaining collateral is less than $18
million; (c) the AMCI Parties shall be
entitled to withdraw collateral in an
amount equal to the difference between (i)
the fair market value of the Membership
Interests held pursuant to the Pledge
Agreement and (ii) the actuarially
determined value of such Retained
Liabilities, if less, upon presentation of
an actuarial certification reasonably
acceptable to the Company's independent
public accountants showing that the
actuarially determined value of such
Retained Liabilities is less than the fair
market value of the
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Membership Interests held pursuant to the
Pledge Agreement; provided that (x) no
such withdrawal shall occur more than once
in a 12 month period and (y) any
withdrawn collateral shall be restored (but
not in an amount in excess of the
difference between $36 million and the
amount, if any, theretofore purchased
pursuant to Section 6 of the Member
Agreement) in the event and to the extent
that the actuarially determined value of
the such Retained Liabilities increases
following a withdrawal; and (d) the AMCI
Parties shall be entitled from time to
time to substitute collateral acceptable to
the FRC Parties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF KM REGARDING THE
TRANSACTION
For the purpose of inducing the FRC Parties and the Company to
enter into and perform this Agreement, KM
represents and warrants to the Company
and the FRC Parties that the statements
contained in this Article III are
correct and complete as of the date of this
Agreement and will be correct and
complete as of the Closing Date (as though
made then and as though the Closing
Date were substituted for the date of this
Agreement throughout this Article
III), except as set forth in the AMCI
Disclosure Schedule.
3.1 Organization of the AMCI Entities and the Asset
Contribution Companies. Each of the AMCI
Entities is a corporation, partnership
or limited liability company, as the case
may be, that is duly organized,
validly existing and in good standing under
the laws of the jurisdiction of its
organization.
3.2 Authorization of Transaction. The AMCI Parties have full
power and authority (including, where
applicable, full power and authority as an
organization) to execute, deliver and
perform its obligations under this
Agreement and each of the AMCI Parties has
full power and authority (including,
where applicable, full power and authority
as an organization) to execute and
deliver each other agreement or instrument
to which it is a party in connection
with this Agreement and to perform its
obligations thereunder. The AMCI Parties'
execution, delivery and performance of this
Agreement and the execution,
delivery and performance of all other
agreements and instruments by each of the
AMCI Parties in connection with this
Agreement and the transactions contemplated
under this Agreement have been duly
authorized by all requisite organizational
or other action on the part of each of the
AMCI Parties. This Agreement and all
other agreements or instruments executed
and delivered by each of the AMCI
Parties in connection with this Agreement
have been duly executed and delivered
by each of the AMCI Parties. This Agreement
and all other agreements or
instruments executed and delivered by each
of the AMCI Parties pursuant to this
Agreement constitute the legal, valid and
binding obligation of each of the AMCI
Parties, enforceable in accordance with
their respective terms and conditions,
subject, however, to the effects of
bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting
creditors' rights generally, and to general
principles of equity (regardless of whether
such enforceability is considered in
a proceeding in equity or at law). Section
3.2 of the AMCI Disclosure Schedule
sets forth all material notices to, filings
with, and all other authorizations,
consents, or approval of Governmental
Authorities required to be made or
obtained in order to consummate the
transactions contemplated by
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this Agreement.
3.3 Noncontravention. Neither the execution, delivery or
performance of this Agreement by the AMCI
Parties nor the execution, delivery or
performance by each of the AMCI Parties of
each other agreement or instrument to
which it is a party executed in connection
with this Agreement or delivered
pursuant to this Agreement, nor the
consummation of the transactions
contemplated hereby or thereby, will (i)
violate any Law to which any of the
AMCI Parties is subject or any provision of
its Organizational Documents, (ii)
contravene, conflict with or result in a
material violation of any of the terms
or requirements of, or give any
Governmental Authority the right to revoke,
withdraw, suspend, cancel or terminate any
material authorization or Permit
issued by a Governmental Authority that is
held by any of the AMCI Parties or
that otherwise relates to the Contributed
Interests, or (iii) give any
Governmental Authority or other Person the
right to challenge any material
portion of the transactions contemplated
under this Agreement or exercise any
remedy or obtain any relief that is
material to the Contributed Interests under
any Law to which any of the AMCI Parties is
subject, or (iv) conflict with,
result in a breach of, constitute a default
under, result in the acceleration
of, create in any party the right to
accelerate, terminate, modify, cancel or
exercise any material remedy or loss of
rights, or result in the creation of any
Lien, or require any notice (in all such
cases with or without the giving of
notice and/or the passage of time) under
any Material Contract or material lease
to which any of the AMCI Parties is a party
or by which it is bound or to which
any of its assets is subject.
3.4 Brokers' Fees. None of the AMCI Parties has any Liability
or obligation to pay any fees or
commissions to any broker, finder, or agent
with respect to the transactions
contemplated by this Agreement for which any of
the FRC Parties, the Company or any of any
of the Contributed Interests could
become liable or obligated.
3.5 Investment. The AMCI Parties acquiring Membership
Interests are not acquiring the same with a
view to, or for sale in connection
with, any distribution thereof within the
meaning of the Securities Act. The
AMCI Parties, together with their directors
and executive officers and advisors,
are familiar with investments of the nature
of the Membership Interests,
understand that this investment involves
substantial risks, have adequately
investigated the Membership Interests, and
have substantial knowledge and
experience in financial and business
matters such that they are capable of
evaluating, and have evaluated, the merits
and risks inherent in acquiring the
Membership Interests, and are able to bear
the economic risks of such
investment. The AMCI Entities acknowledges
that the Membership Interests have
not been registered or qualified under, and
are sold in reliance upon an
exemption from the registration
requirements of, the Securities Act, and the
rules and regulations thereunder and any
applicable state securities or "Blue
Sky" laws, and may not be offered, sold,
transferred, pledged, hypothecated or
otherwise assigned unless they are
registered under such securities laws or
regulations or an exemption from such
registration is available.
3.6 Ownership of Equity Interests. Section 3.6 of the AMCI
Disclosure Schedule sets forth a complete
and correct listing of the record and
beneficial ownership of the Subject
Companies. The ownership interests of
Contributed Companies have been duly
authorized, and are
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validly issued and fully paid and
non-assessable and are owned solely by one or
more of the AMCI Parties. Except to the
extent created under the Securities Act
and state securities Laws, and as created
by the respective Organizational
Documents, (i) the ownership interests of
the Contributed Companies are held
free and clear of rights of first refusal,
restrictions on transfer, Taxes, and
Encumbrances, and (ii) there are no
Commitments with respect to the ownership
interests of the Contributed Companies.
None of the AMCI Parties are a party to
any voting trust, proxy, or other agreement
or understanding with respect to
voting any ownership interests of the
Contributed Companies. The minute books
(containing the records of meetings of the
stockholders, members, partners, or
other governing bodies, and any committees
of such governing bodies), the
ownership certificates and record books of
each of the Contributed Companies are
correct and complete in all material
respects. None of the Contributed Companies
is in default under or in violation of any
provision of its Organizational
Documents. None of the Contributed
Companies controls directly or indirectly or
has any direct or indirect equity
participation in any Person other than other
Contributed Companies.
3.7 FRC Parties' Breach of Representation or Warranty. To the
Knowledge of the AMCI Parties (a) none of
the representations and warranties
made by the FRC Parties pursuant to this
Agreement is inaccurate or incomplete
and (b) no breach of any such
representation or warranty has occurred or is
occurring. None of the AMCI Parties has
failed to disclose to the FRC Parties
the fact that an inaccurate or incomplete
representation or warranty has been
made by the FRC Parties, or that a breach
has occurred.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FRC PARTIES REGARDING
THE TRANSACTION
For the purpose of inducing the AMCI Parties to enter into and
perform this Agreement, the FRC Parties
jointly and severally represent and
warrant to the Company and the AMCI Parties
that the statements contained in
this Article IV are correct and complete as
of the date of this Agreement and
will be correct and complete as of the
Closing Date (as though made then and as
though the Closing Date were substituted
for the date of this Agreement
throughout this Article IV), except as set
forth in the FRC Disclosure Schedule.
4.1 Organization .
(a) Each of the FRC Parties is a corporation, limited
partnership or limited liability company,
as the case may be, duly organized,
validly existing, and in good standing
under the Laws of the State of Delaware.
(b) Each of the Company and its Subsidiaries is (i) a
limited liability company duly organized,
validly existing and in good standing
under the laws of the State of Delaware,
(ii) is duly authorized to conduct
business and is in good standing under the
Laws of each
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jurisdiction where the failure to be so
authorized and in good standing would
reasonably be expected to have a Material
Adverse Effect on the Business and
(iii) has full power and authority to carry
on the Business.
(c) The Company was formed and organized for the
purpose of carrying on any lawful business.
The Company's business has been
limited to matters of its organization and
establishment as a business entity,
and the execution, delivery and performance
of this Agreement and the Coal
Acquisition Agreements. There are no
outstanding membership interests in the
Company except those held by one or both of
the FRC Parties. Immediately
following the consummation of the
transactions contemplated hereby, the only
outstanding membership interests in the
Company will be the membership interests
(i) issued pursuant to paragraphs (b) and
(c) of Section 2.7, (ii) issued to
Alpha Coal Management, LLC.
4.2 Authorization of Transaction. Each of the Company and the
FRC Parties has full power and authority
(including full power and authority as
an organization) to execute, deliver and
perform its obligations under this
Agreement and each other agreement or
instrument to which it is a party in
connection with this Agreement. The
Company's and the FRC Parties' execution,
delivery and performance of this Agreement
and all other agreements and
instruments in connection with this
Agreement and the transactions contemplated
under this Agreement have been duly
authorized by all requisite corporate or
other action on the part of the Company and
the FRC Parties. This Agreement and
all other agreements or instruments
executed and delivered by the Company and
the FRC Parties in connection with this
Agreement have been duly executed and
delivered by the Company and the FRC
Parties. This Agreement and all other
agreements or instruments executed and
delivered by the Company and the FRC
Parties pursuant to this Agreement
constitute the legal, valid and binding
obligation of the Company and the FRC
Parties, respectively, enforceable in
accordance with their terms and conditions,
subject, however, to the effects of
bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting
creditors' rights generally, and to general
principles of equity (regardless of
whether such enforceability is considered
in a proceeding in equity or at law).
Section 4.2 of the FRC Disclosure Schedule
sets forth all material notices to,
filings with, and all authorizations,
consents, or approvals of Governmental
Authorities required to be made or obtained
in order to consummate the
transactions contemplated by this
Agreement.
4.3 Noncontravention. Neither the execution, delivery or
performance of this Agreement by the
Company or the FRC Parties nor the
execution, delivery or performance by the
Company or the FRC Parties of each
other agreement or instrument to which it
is a party executed in connection with
this Agreement or delivered pursuant to
this Agreement, nor the consummation of
the transactions contemplated hereby or
thereby, will (i) violate any Law to
which any of the Company or the FRC Parties
is subject or any provision of its
Organizational Documents, (ii) contravene,
conflict with or result in a material
violation of any of the terms or
requirements of, or give any Governmental
Authority the right to revoke, withdraw,
suspend, cancel or terminate any
material authorization or Permit issued by
a Governmental Authority that is held
by the FRC Parties or the Company, (iii)
give any Governmental Authority or
other Person the right to challenge any
material portion of the transactions
contemplated under this Agreement or
exercise any material remedy or obtain any
relief that is material to the Contributed
Interests under any Law to which any
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of the Company or the FRC Parties is
subject, or (iv) conflict with, result in a
breach of, constitute a default under,
result in the acceleration of, create in
any Party the right to accelerate,
terminate, modify, or cancel or exercise any
material remedy or loss of rights, or
result in the creation of any Lien, or
require any notice(in all such cases with
or without the giving of notice and/or
the passage of time) under any material
agreement, contract, lease, license,
instrument, or other arrangement to which
the any of the Company or the FRC
Parties is a party or by which it is bound
or to which any of its assets is
subject.
4.4 Brokers' Fees. None of the Company or the FRC Parties have
any Liability or obligation to pay any fees
or commissions to any broker,
finder, or agent with respect to the
transactions contemplated by this Agreement
for which the Company or the AMCI Parties
or their Affiliates could become
liable or obligated.
4.5 Investment. The FRC Parties are not acquiring Membership
Interests with a view to, or for sale in
connection with, any distribution
thereof within the meaning of the
Securities Act. Each of the FRC Parties,
together with its directors and executive
officers and advisors, is familiar
with investments of the nature of the
Membership Interests, understands that
this investment involves substantial risks,
has adequately investigated the
Membership Interests, and has substantial
knowledge and experience in financial
and business matters such that it is
capable of evaluating, and has evaluated,
the merits and risks inherent in purchasing
the Membership Interests, and is
able to bear the economic risks of such
investment. Each of the FRC Parties
acknowledges that the Membership Interests
have not been registered or qualified
under, and are sold in reliance upon an
exemption from the registration
requirements of, the Securities Act and the
rules and regulations thereunder,
and any applicable state securities or
"Blue Sky" laws, and may not be offered,
sold, transferred, pledged, hypothecated or
otherwise assigned unless they are
registered under such securities laws or
regulations or an exemption from such
registration is available.
4.6 AMCI Parties' Breach of Representation or Warranty. To the
Knowledge of the FRC Parties, (A) there is
no fact or circumstance that would
cause the any of the representations and
warranties made by the AMCI Parties
pursuant to this Agreement to be inaccurate
or incomplete and (B) no breach of
any such representation or warranty set
forth has occurred or is occurring. None
of the FRC Parties have failed to disclose
to the AMCI Parties the fact that an
inaccurate or incomplete representation or
warranty has been made by the AMCI
Parties, or that a breach has occurred or
failed to give the AMCI Parties the
opportunity to correct any inaccurate or
incomplete representation or warranty
or to cure any breach in accordance with
Section 6.9.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF KM REGARDING THE
CONTRIBUTED INTERESTS
For the purpose of inducing the FRC Parties and the Company to
enter into and perform this Agreement, KM
represents and warrants to the Company
and the FRC Parties that the
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statements contained in this Article V are
correct and complete as of the date
of this Agreement and will be correct and
complete as of the Closing Date (as
though made then and as though the Closing
Date were substituted for the date of
this Agreement throughout this Article V),
except as set forth in the AMCI
Disclosure Schedule.
5.1
Incorporation. Each of the Subject Companies
(i) is a corporation, partnership or
limited liability company, as the case may
be, that is duly organized, validly
existing and in good standing under the Laws
of the jurisdiction of its organization,
(ii) is duly authorized to conduct
business and is in good standing under the
Laws of each jurisdiction in which it
has had an office or in which it paid taxes
in past three years, and (iii) has
full power and authority to carry on the
businesses in which it is engaged and
to own and use the properties owned and
used by it.
5.2
Noncontravention. The execution, delivery
and performance by the applicable Subject
Company of each agreement or
instrument to which it is a party executed
in connection herewith or delivered
pursuant to this Agreement and the
consummation of the transactions contemplated
in this Agreement and therein will not,
with or without the giving of notice or
the passage of time, or both: (i) violate
any Law to which any of the Subject
Company is subject or any provision of its
Organizational Documents; (ii)
conflict with, or result in a violation or
breach of, or a default or event of
default under, or require the consent of
any other party in order to avoid a
default or event of default under, a right
to accelerate, right to exercise any
remedy or loss of rights under, or result
in the creation of any Lien under or
pursuant to, any provision of any Subject
Company's Organizational Documents or
of any material lease or Material Contract
to which any Subject Company is a
party or by which any Subject Company is
bound, or any Law or any order,
judgment, writ, injunction or decree to
which any Subject Company is a party or
by which any Subject Company or the
Contributed Assets may be bound or affected;
or (iii) give any Governmental Authority or
other Person the right to challenge
any of the transactions contemplated
hereunder or exercise any remedy or obtain
any relief under any Law to which any
Subject Company is subject.
5.3 Absence of Changes. Except as contemplated by this
Agreement, since (x) the end of the periods
of financial statements of the
Contributed Companies covered by most
recent audit report for each Contributed
Company as to which audited financial
statements exist or (y) December 31, 2001
for each Contributed Company as to which
audited financial statements do not
exist, none of the Contributed Companies
has, and none of the Asset Contribution
Company has, with respect to the
Contributed Assets,:
(a) borrowed or agreed to borrow any funds or
incurred, or become subject to, any
Liability for borrowed money, or issued any
note, bond or other debt security, or
guaranteed any indebtedness for borrowed
money or capitalized lease obligation,
except Liabilities incurred in the
Ordinary Course of Business, none of which
would reasonably be expected to
result in an impact greater than
$250,000;
(b) paid any Liability other than Liabilities in the
Ordinary Course of
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Business;
(c) sold, transferred or otherwise disposed of, or
agreed to sell, transfer or otherwise
dispose of any of Real Property, or, other
than in the Ordinary Course of Business,
any other Contributed Interests, or
canceled or otherwise terminated, or agreed
to cancel or otherwise terminate,
other than in the Ordinary Course of
Business, any Permits;
(d) except in the Ordinary Course of Business,
entered into any agreement, lease or
license (or series of related agreements,
contracts, leases and licenses) or made or
permitted any material amendment to
or termination, acceleration, modification
or cancellation of any Contract or
breached any provision of any Contract;
(e) merged or consolidated with any other Person;
(f) mortgaged, pledged or subjected to any Lien any
of its assets or properties other than
Permitted Encumbrances;
(g) made any capital expenditure (or series of
related capital expenditures) either (x)
involving more than $250,000 or (y)
outside the Ordinary Course of
Business;
(h) made any capital investment in, any loan to, or
any acquisition of the securities or assets
of, any other Person (or series of
related capital investments, loans and
acquisitions) either (x) involving
$250,000 or (y) outside the Ordinary Course
of Business;
(i) delayed or postponed the payment of accounts
payable and other Liabilities outside the
Ordinary Course of Business;
(j) cancelled, compromised, waived or released any
right or claim (or series of related rights
and claims) involving more than
$100,000;
(k) except for contracts of employment at will,
entered into any employment contract or
collective bargaining agreement, written
or oral, or modified the terms of any
existing such contract;
(l) except in the Ordinary Course of Business,
adopted, amended, modified or terminated
any bonus, profit-sharing, incentive,
severance or other compensatory plan,
contract or commitment for the benefit of
any of the directors, officers and
Employees of the Contributed Companies, or
taken any such action with respect to any
other Employee Benefit Plan;
(m) made any other change in employment terms for any
of the directors, officers and Employees of
the Subject Companies outside the
Ordinary Course of Business;
(n) suffered any damage, destruction or loss, whether
or not covered by insurance, that has had
or would reasonably be expected to
have a Material Adverse Effect;
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(o) implemented or adopted any change in its
accounting methods or principles or the
application thereof; or
(p) entered into any agreement, arrangement or
understanding with respect to any of the
foregoing.
5.4 Financial Statements. Attached to this Agreement as
Exhibit I are the following financial
statements (collectively, the "Financial
Statements"): (i) audited consolidated
fiscal year balance sheets and statements
of income, changes in stockholders' equity
and cash flows for each of the
Contributed Companies and their respective
Subsidiaries as of and for the most
recent fiscal year (the "Most Recent Fiscal
Year End"); and (ii) unaudited
interim consolidated balance sheets and
statements of income, changes in
stockholders equity and cash flows of the
enterprise represented by the
Contributed Interests (the "Most Recent
Financial Statements") as of and for the
period ended September 30, 2002 (the "Most
Recent Fiscal Month End"). The
Financial Statements (including the notes
thereto) have been prepared in
accordance with GAAP and present fairly the
financial condition of the Company
and its Subsidiaries as of such dates and
the results of operations of the
Company and its Subsidiaries for such
periods; provided, however, that the Most
Recent Financial Statements are subject to
normal year-end adjustments and lack
footnotes and other presentation items. No
material changes to the Financial
Statements for any Contributed Company for
which audited financial statements
exist will be required to conform them to
financial statements prepared in
accordance with Regulations S-K and S-X
promulgated by the SEC applied on a
consistent basis throughout the periods
covered thereby.
5.5 Real Property.
(a) Section 5.5(a) of the AMCI Disclosure Schedule
lists all of the material Real Property
which is an owned Contributed Interest
or is owned by a Contributed Company.
(b) Section 5.5(b) of the AMCI Disclosure Schedule
identifies the Material Leased Real
Property Rights and Interests that comprise
a portion of the Real Property and which is
a Contributed Interest or of which a
Contributed Company is the lessee, all of
which the AMCI Parties have made
available to the FRC Parties.
(c) The Real Property constitutes all real property
necessary or required to operate the
Business in the manner currently conducted.
(d) As to each property shown in Section 5.5(a) or
(b) of the AMCI Disclosure Schedule as
being owned or leased by a particular
entity, except for Permitted Encumbrances,
such entity holds (A) Mining Title to
the Active Operating Properties that are
shown as owned or leased by such entity
in Section 5.5(a) or (b) of the AMCI
Disclosure Schedule and (B) as to the other
real property shown as owned or leased by
each such entity in Section 5.5(a) or
(b) of the AMCI Disclosure Schedule, an
interest of record or a leasehold
interest from a person or entity
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which, to the Knowledge of the AMCI
Parties, had (in the case of owned real
property) or has (in the case of leased
real property) an interest of record.
(e) The Subject Companies have not received any
written notice alleging that the Subject
Companies are in default under any
material lease. The Subject Companies are
not in material default under any
material lease relating to Active Operating
Properties or other real property.
(f) Each of the leases in Section 5.5(b) of the AMCI
Disclosure Schedule is, and, subject to
obtaining any requisite third party
consents, all of which are specified in
Section 5.5(f) of the AMCI Disclosure
Schedule, will be on and immediately
following the Closing, valid and
enforceable against the lessor or other
parties thereto in accordance with its
terms. To the Knowledge of the AMCI
Parties, there are no unwritten
modifications to such leases.
(g) None of the Subject Companies have received any
notice of claims that the Subject Companies
has mined any coal that it did not
have the right to mine or mined any coal in
such reckless and imprudent fashion
as to give rise to any material claims for
loss, waste or trespass.
(h) No condemnation or eminent domain proceeding
against any part of such property is
pending or, to the Knowledge of the AMCI
Parties, threatened.
(i) The AMCI Parties have made available to the FRC
Parties geological data, reserve data,
material existing mine maps, surveys,
title insurance policies, title insurance,
abstracts and other evidence of title
core hole logs and associated data, coal
measurements, coal samples, lithologic
data, coal reserve calculations or reports,
washability analyses or reports,
mine plans, mining permit applications and
supporting data, engineering studies
and all other information, maps, reports
and data in the possession of the AMCI
entities and relating to or affecting the
Real Property, including the coal
reserves, coal ownership, coal leases to
the Subject Companies, coal leases from
the Subject Companies to third parties,
mining conditions, mines, and mining
plans of the Contributed Companies as
prepared and utilized by the Subject
Companies in their day to day Mining
Activities (collectively, the "Mining
Data"). NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, THE COMPANY
AND THE FRC PARTIES ACCEPT THE CONTRIBUTED
COMPANIES' AND ASSET CONTRIBUTION
COMPANIES' COAL RESERVES IN OR UNDER THE
REAL PROPERTY, AS IS, WHERE IS,
TOGETHER WITH THE MINING DATA, FREE OF ANY
WARRANTY (EXPRESS OR IMPLIED) WITH
REGARD TO THE MINEABILITY, WASHABILITY,
RECOVERABILITY, VOLUME, OR QUANTITY OR
QUALITY OF ANY COAL RESERVE. The coal
reserves mined by the Subject Companies
(whether such reserves are owned or leased
by any of the Subject Companies) are
not subject to any mining rights of any
other Person with respect to such coal
reserves.
5.6 Title of Assets other than Real Property.
(a) The Subject Companies (i) own all of the their
assets, respectively, other than Real
Property (which is addressed in Section
5.5), free and clear of all Liens (other
than
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Permitted Encumbrances) and restrictions on
transfer or (ii) lease such assets
under valid and enforceable leases (subject
to any applicable bankruptcy,
insolvency, reorganization, moratorium or
other similar Laws affecting generally
the enforcement of creditors' rights). No
rights of the Subject Companies under
such leases have been assigned or otherwise
transferred as security for any
obligation of the Subject Companies.
(b)
The assets held by the Subject Companies include
all tangible and intangible assets owned by
the Subject Companies and used in
the Business.
(c) The Equipment that is currently in use has been
maintained in accordance with normal
industry practice and is suitable for the
purposes for which the Subject Companies
are presently using such Equipment,
normal wear and tear excepted.
5.7 Intellectual Property. No third party has asserted any
interest in the Intellectual Property, nor
has any third party alleged that any
Contributed Company has infringed on any
Intellectual Property of any third
party. To the Knowledge of the AMCI
Parties, none of the Subject Companies
interferes with, infringes upon,
misappropriates, or otherwise comes into
conflict with, any Intellectual Property
rights of third parties as a result of
the continued operation of the Business as
presently conducted.
5.8 Permits and Environmental Compliance.
(a) Each Subject Company, as related to the
Contributed Assets, is in material
compliance with all Environmental Laws.
Neither any Contributed Company nor any
Asset Contribution Company (such Persons
being hereafter referred to in this Section
5.8 as "Operators") has been
notified by any Governmental Authority of
any current, alleged or unresolved
violation of any Environmental Laws
applicable to Mining Activities, including
any investigatory, remedial or corrective
obligations, that would result in (i)
closure, suspension or restriction of any
mine or mining-related activity on the
Real Property, (ii) revocation or
suspension of any license or Permits, or (iii)
exposure of the Company or the FRC Parties
to the imposition of any fines or
other civil or criminal monetary penalty in
excess of $5,000.
(b) The Permits include all material permits,
licenses, franchises and other
authorizations necessary to conduct the Mining
Activities as currently conducted by the
Operators, and the Operators are in
material compliance with all such Permits.
No such Permit is the subject of any
proceeding by or in front of any
Governmental Authority that might affect its
validity and no such proceeding is pending
or, to the Knowledge of the AMCI
Parties, threatened.
(c) The AMCI Parties have made available to the FRC
Parties true and complete copies of (i) the
Permits, (ii) all of the mining
permits and other permits held by each
Operator pertaining to the Contributed
Interests, together with a description of
the permitted property or facility,
the amount of the bond for each such Permit
and the surety for each such bond or
manner in which each such bond has
otherwise been posted, (iii) all other
licenses, franchises, certificates,
concessions and other governmental approvals
and authorizations held by each Operator
pertaining
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to the Contributed Interests, as amended,
supplemented and modified through the
date of this Agreement, and (iv) any and
all pending applications for additional
mining permits and other licenses and
authorizations that have been submitted to
any Governmental Authority by an Operator
pertaining to the Contributed
Interests or are in the process of
development either in-house or through
consultants.
(d) Section 5.8(d) of the AMCI Disclosure Schedule
includes a true and complete list of all of
the citations, notices of
non-compliance and notices of violation
received by each Operator with respect
to the Contributed Interests from
applicable state permitting authorities, the
federal Environmental Protection Agency
("EPA"), the federal Office of Surface
Mining ("OSM"), the federal Mine Safety and
Health Administration ("MSHA"), or
any other Governmental Authority that
remain outstanding. No Operator is subject
to any cessation orders, cease and desist
orders, closure orders or show cause
orders issued by EPA, OSM, MSHA, or any
such other Governmental Authority with
respect to the Contributed Interests.
(e) With respect to the Contributed Interests, each
Operator is in material compliance with all
of the requirements of the Surface
Mining Control and Reclamation Act of 1977
("SMCRA"), the Federal Mine Safety
and Health Act of 1977, as amended, all
similar statutes of the Commonwealths of
Kentucky and Pennsylvania and the States of
West Virginia and Colorado, and all
rules and regulations promulgated under
those Acts and statutes by OSM, MSHA,
applicable state permitting authorities,
and any other Governmental Authority.
With respect to the Contributed Interests,
no Operator has been subjected to any
bond forfeiture, permit suspension or
revocation, or similar effort and
proceedings or investigation instituted by
OSM, applicable state permitting
authorities or any other Governmental
Authority.
(f) To the Knowledge of the AMCI Parties, after the
Closing, neither the FRC Parties nor the
Company will be liable for any fines,
penalties, fees, Taxes or other
governmental charges assessed under
Environmental Laws with respect to notices
of violation, cessation orders,
closure orders, show cause orders or other
governmental enforcement actions
issued prior to Closing with respect to the
Contributed Interests. Neither this
Agreement nor the consummation of the
transactions that are the subject of this
Agreement will result in any Liabilities
being imposed on the FRC Parties or the
Company for site investigation or cleanup,
or notification to or consent of any
Governmental Authority or third parties,
pursuant to any of the so-called
"transaction-triggered" or "responsible
property transfer" Environmental Laws.
The representation in the previous sentence
does not relate to any matters for
which the Company or the FRC Parties have
the responsibility, pursuant to this
Agreement, to notify any Governmental
Authority or to otherwise process with any
Governmental Authority in connection with
the transfer of any Permit.
(g) None of the assets of the Contributed Companies
or the Contributed Assets is identified on
(i) the current or proposed National
Priorities List under 40 C.F.R. Section
300, (ii) the Comprehensive
Environmental Response, Compensation and
Liability Inventory System ("CERCLIS")
list, or (iii) any list arising from a
federal, state or local statute similar
to CERCLA. To the Knowledge of the AMCI
Parties, the Real Property is not
Contaminated with any Hazardous
Substance.
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(h) (A) None of the assets of the Contributed
Companies nor the Contributed Assets has
been or is being used in any manner
associated with the production,
manufacture, processing, generation, storage,
treatment, disposal, management, shipment
or transportation of Hazardous
Substances, and no such assets are
Contaminated by any Hazardous Substance; (B)
there are no underground storage tanks
regulated pursuant to RCRA Section 9001
(42 U.S.C. Section 6991) or equivalent
authorized state program, and no above
ground storage tanks, located at, on, in or
under the assets of the Contributed
Companies or the Contributed Assets; (C)
there is no asbestos-containing
material in any form or condition located
at, on, in or under the assets of the
Contributed Companies or the Contributed
Assets; (D) there are no materials or
equipment containing polychlorinated
biphenyls located at, on, in or under the
assets of the Contributed Companies or the
Contributed Assets; (E) there are no
landfills or other areas located at, on, in
or under the assets of the
Contributed Companies or the Contributed
Assets where Hazardous Substances have
been disposed; and (F) neither any
Contributed Company nor any Asset
Contribution Company has disposed of any
Hazardous Substance at any offsite
disposal area located on the property of
any other Person, other than a facility
permitted by any Governmental Authority
with jurisdiction to receive such
Hazardous Substance.
(i) No Contributed Company or Asset Contribution
Company, with respect to the Contributed
Assets, has either expressly or by
operation of Law, assumed or undertaken any
Liability, including without
limitation, any Liability for corrective or
remedial action, of any other Person
relating to any Environmental Laws.
(j) To the Knowledge of the AMCI Parties, no
conditions existing as of the Closing Date
and relating to the assets of the
Contributed Companies or the Contributed
Assets or the activities of the Subject
Companies or any of their respective
predecessors or Affiliates will prevent or
materially hinder the Company's compliance
with Environmental Laws, require the
Company to undertake any investigatory,
remedial or corrective actions pursuant
to Environmental Laws or impose upon the
Company or the FRC Parties any other
Liabilities pursuant to Environmental Laws,
including without limitation, any
Environmental Laws relating to onsite or
offsite releases or threatened releases
of Hazardous Substances or imposing
Liability for personal injury, property
damage or natural resource damage.
(k) The operation of the coal mining and processing
operations and the state of reclamation
with respect to th
